assets.aarp.org · unsecured loans from banks and finance companies, many consumers, particularly...

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written by

Elizabeth Renuart, Attorney,National Consumer Law Center

George Gaberlavage, Project Officer,AARP Public Policy Institute

October, 2000

The Public Policy Institute, formed in 1985, is part of Public Affairs at AARP. One of the missions of the Institute is tofoster research and analysis on public policy issues of importance to older Americans. This paper represents part ofthat effort. The views expressed herein are for information, debate, and discussion, and do not necessarily representformal policies of AARP.

© 2000, AARP. Reprinting with permission only. Stock Number: D16954AARP, 601 E Street, NW, Washington, DC 20049http://research.aarp.org

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The author would like to acknowledge the assistance of the following individuals indeveloping the model statute: Margot Saunders of the National Consumer LawCenter; Jean Ann Fox of the Consumer Federation of America; Earl Lui of ConsumersUnion; and attorneys Kathleen Keest, Addison Parker, Richard Fisher, and JackBlock.

The project officer would like to acknowledge the assistance of staff from acrossAARP who reviewed this document. It required a level of commitment and purposethat went well beyond the normal review and comment process. Special thanks aredue Dacosta Mason, Consumer Issues Team Leader, AARP State LegislationDepartment; Deborah Zuckerman, Staff Attorney, AARP Foundation Litigation; SharonHermanson, Senior Policy Advisor, Consumer Team, AARP Public Policy Institute;and Laura Polacheck, Consumer Issues Senior Analyst, AARP State LegislationDepartment. The project officer also would like to thank Monique Einhorn, PolicyResearch Analyst, AARP Public Policy Institute, for her editorial assistance; AnnMcLarty Jackson, Policy Research Specialist, and Gabriel Montes, SeniorAdministrative Associate, AARP Public Policy Institute, for formatting the materials forprinting; and Jean Ann Fox, Director of Consumer Protection of the ConsumerFederation of America, for her valuable insights and advice.

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Introduction ....................................................................................................................................................... 5

Model Act and CommentaryTitle; purpose .................................................................................................................................................. 11

Commentary: Purpose ............................................................................................................................. 11

Section 1. Definitions ..................................................................................................................................... 11Commentary: Definitions .......................................................................................................................... 11

Section 2. Applicability ................................................................................................................................... 12Commentary: Applicability ........................................................................................................................ 13

Section 3. Exemptions ................................................................................................................................... 13Commentary: Exemptions ........................................................................................................................ 13

Section 4. Licensing ...................................................................................................................................... 13Commentary: Licensing ........................................................................................................................... 15

Section 5. Information and Annual Reports ................................................................................................... 15Commentary: Information and Annual Reports ........................................................................................ 17

Section 6. Required Acts ............................................................................................................................... 17Commentary: Required Acts .................................................................................................................... 18

Section 7. Required Disclosures .................................................................................................................... 18Commentary: Required Disclosures ......................................................................................................... 19

Section 8. Permitted Charges ........................................................................................................................ 20Commentary: Permitted Charges ............................................................................................................. 20

Section 9. Prohibited Acts .............................................................................................................................. 21Commentary: Prohibited Acts ................................................................................................................... 22

Section 10. Enforcement ............................................................................................................................... 23Commentary: Enforcement ...................................................................................................................... 23

Section 11. Severability .................................................................................................................................. 24

Appendix A: Summary of State Payday Loan LawsAlabama ................................................................................................................................................... 27Alaska ...................................................................................................................................................... 27Arizona ..................................................................................................................................................... 28Arkansas .................................................................................................................................................. 30California .................................................................................................................................................. 32Colorado .................................................................................................................................................. 33Connecticut .............................................................................................................................................. 35Delaware .................................................................................................................................................. 35District of Columbia .................................................................................................................................. 36Florida ...................................................................................................................................................... 37Georgia .................................................................................................................................................... 37Hawaii ...................................................................................................................................................... 38Idaho ........................................................................................................................................................ 39Illinois ....................................................................................................................................................... 39Indiana ..................................................................................................................................................... 39Iowa ......................................................................................................................................................... 40Kansas ..................................................................................................................................................... 41Kentucky .................................................................................................................................................. 42Louisiana.................................................................................................................................................. 43Maine ....................................................................................................................................................... 44Maryland .................................................................................................................................................. 44Massachussetts ....................................................................................................................................... 44Michigan................................................................................................................................................... 44Minnesota ................................................................................................................................................ 45Mississippi ................................................................................................................................................ 47

Missouri ................................................................................................................................................... 48Montana ................................................................................................................................................... 49Nebraska ................................................................................................................................................. 51Nevada..................................................................................................................................................... 52New Hampshire ....................................................................................................................................... 53New Jersey .............................................................................................................................................. 53New Mexico ............................................................................................................................................. 53New York .................................................................................................................................................. 53North Carolina .......................................................................................................................................... 54North Dakota ............................................................................................................................................ 54Ohio ......................................................................................................................................................... 55Oklahoma ................................................................................................................................................ 56Oregon ..................................................................................................................................................... 56Pennsylvania ............................................................................................................................................ 56Puerto Rico .............................................................................................................................................. 56Rhode Island ............................................................................................................................................ 56South Carolina ......................................................................................................................................... 57South Dakota ........................................................................................................................................... 57Tennessee ............................................................................................................................................... 58Texas ....................................................................................................................................................... 59Utah ......................................................................................................................................................... 60Vermont ................................................................................................................................................... 61Virgin Islands............................................................................................................................................ 61Virginia ..................................................................................................................................................... 61Washington .............................................................................................................................................. 62West Virginia ............................................................................................................................................ 63Wisconsin ................................................................................................................................................ 63Wyoming .................................................................................................................................................. 64

Appendix B: Survey of State Payday Loan LawsLegal Status of Payday Lending in the State................................................................................................... 67Qualificatons for Lender ................................................................................................................................. 68Loan Terms and Conditions ............................................................................................................................ 69Disclosure Requirements ............................................................................................................................... 70Loan Terms and Conditions, Penalties ........................................................................................................... 71Endnotes ........................................................................................................................................................ 72

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Deferred deposit loans, more commonly referred to as “payday loans,” are small,unsecured consumer loans that require repayment within a relatively short timeperiod. In a payday loan transaction, the consumer provides the lender with apersonal check and receives cash less the interest and fees charged by the lender.The check is then held for a scheduled period of time, generally until the consumer’snext payday, or a one- or two-week period, hence the term “payday” loan. Whenrepayment is due, the consumer may redeem the check by paying the face amount,allow the check to be cashed, or refinance (that is, “roll over”) the loan by payinganother fee. If the consumer is unable to redeem the check or lacks sufficient funds inhis or her checking account, the consumer must find another way to repay the loan orpossibly be subject to a civil bad check penalty.

Payday loans are marketed as a quick and easy way to get cash. To qualify,consumers need only be employed for a specified period with their current employer,maintain a personal checking account, and show a pay stub and bank statement.Credit checks or other inquiries about ability to repay are not routinely performed.

The number of payday lenders has grown from an estimated 300 in 1992 to nearly8,000 in 1999.1 A recent investment report indicates that the number of paydaylenders may grow to 25,000 within two to three years.2 The industry itself estimatesthe potential market for payday loans at approximately 35 million households.3

While most consumers have other sources for short-term, unsecured credit, such ascredit cards and checking account overdraft protections, a significant portion of thepopulation lacks this type of financial access. The latest (1998) Federal ReserveSurvey of Consumer Finances indicates that approximately one-third of families(32%) do not have credit cards. Coupled with the decline in the availability of small,unsecured loans from banks and finance companies, many consumers, particularlythose with modest incomes or impaired credit, find that payday loans represent theironly source for small-sum, short-term credit.

While payday loans are a source of ready cash, they present a number of seriousconcerns. A recent survey of 230 payday lenders in 20 states found the averagepayday loan annual percentage rate (APR) was 474 percent and concluded thatpayday loans were being made in states, despite usury ceilings far below suchAPRs.4 Often these loans become “debt treadmills” that exacerbate consumerfinancial problems. For example, a 1999 study by the Illinois Department of FinancialInstitutions found 21 percent of borrowers had more than 20 payday loans, and anaverage of 13 contracts per borrower annually.5 Abuses also occur in the making and

1 Kilbourn, P., National Prosperity Is Being Mined with Payday-Lending Traps, The New York Times,June 18, 1999, p. A1.

2 Robinson , J. L. and Lewis, G. L. The Developing Payday Advance Business: The Next Innings:From Emergence to Development. Stephens, Inc. 1999, p.8.

3 The industry bases its estimate on the approximate number of households without a credit card.See Stephens, Inc., Specialty Finance Industry Report, Little Rock, Arkansas, January 26, 1998,p.16.

4 Public Interest Research Groups(PIRGs) and the Consumer Federation of America (CFA).(February 2000). Show Me the Money, p.5-7.

5 Woodstock Institute. Unregulated Payday Lending Pulls Vulnerable Consumers into Spiraling Debt.Reinvestment Alert. (Vol. 14, March 2000), p.3.

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collecting of payday loans. Some lenders fail to provide consumers with Truth inLending Act (TILA) disclosures which makes it difficult for them to understand theterms and cost of these loans. In addition, there are numerous cases of lenders’threatening to use the criminal justice system to collect debts when a check isreturned for insufficient funds.6

Currently, payday lending laws vary significantly across states, falling into threecategories:

Category One: Eighteen states, the Virgin Islands, and Puerto Rico require paydaylenders to comply with the state’s small loan or criminal usury laws.7 These lawsmaintain interest rate caps of up to 36 percent per annum. Typically, these lawscontain extensive provisions specifying the maximum loan amount, the maximumand/or minimum term, the maximum interest rate and permitted charges, andpenalties for the charging of excessive interest and other violations. Also addressedare licensing requirements, prepayment rebate formulas, the conditions under whichlenders can require insurance, required contract provisions, prohibited contractprovisions, and the circumstances, if any, under which annual reports must be filed.8

Since the allowable interest rates and fees are substantially below that which thepayday industry charges, lenders in these states who charge above the statemaximum are operating illegally.9

Category Two: The small loan laws of eight states permit payday lenders to operateand charge any interest rate or fees agreed to by the parties to the loan. The lendersin these states must comply with other provisions of the states’ small loan acts.10

6 National Consumer Law Center (NCLC). NCLC Reports, Consumer Credit and Usury Edition.Volume 18, November/December 1999, p.9.

7 These states are Alabama, Alaska, Connecticut, Georgia, Maine, Maryland, Massachusetts,Michigan, New Hampshire, New Jersey, New York, North Dakota, Oklahoma (minimum term of 60days on loans over $100 effectively prohibits most of these loans), Pennsylvania, Rhode Island,Vermont, Virginia, and West Virginia.

8 Small loan laws were first adopted in the early part of the 20th century in response to the wide-spread problem of loansharking. They were largely the product of the research and promotionalefforts of the Russell Sage Foundation, which, between 1916 and 1942, published several drafts ofa Uniform Small Loan Law. This uniform law was widely adopted by the states, and language fromthe uniform statute appears in numerous consumer finance statutes today. Though these statutesmay no longer be called small loan laws, they may now govern relatively large consumer loans.The concept behind the small loan law was to drive loan sharks out of business by making itprofitable for regular businesses to make small loans to individuals. The uniform law created a classof licensed lenders authorized to charge rates (36 percent per year) significantly in excess ofgeneral usury rates. In return, these lenders accepted regulation, the risk involved in personallending, and the higher administrative expense of small loans. The uniform law strictly limited thecharges or fees other than interest that a lender could assess and provided harsh penalties,including voiding the entire loan (which meant that the lender lost both the interest charged and theprincipal) for statutory violations.

9 One caveat is that the state enforcement agency may attempt to exempt payday lenders from thereach of the small loan act by administrative fiat. This has recently occurred in Michigan. Thisdecision is now subject to challenge in the courts. Other similar cases are pending in Alabama andMaryland.

10 These states are Delaware, Idaho, Illinois, Indiana (permits the charging of $33 rather than the 36percent per annum applicable to other loans), New Mexico, Oregon, South Dakota (small loan actwas repealed in its entirety), and Wisconsin.

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Category Three: Twenty-four states and the District of Columbia have passedstatutes or promulgated regulations specifically authorizing payday lending.11

Generally, these laws require either licensing or registration. Some states mandatethat the lenders put up a bond and/or maintain a certain level of net assets or worth.These states typically specify a maximum term and maximum amount of the loan,and establish the interest rate or fees to be charged.

Many Category Three states obligate the lender to provide a written agreement to theconsumer; approximately half of these states prohibit rollovers. Other states set amaximum number of times that borrowers can roll over their loans, or limit the numberof payday loans that a borrower may have outstanding at any one time. Additionally,most Category Three states create some type of criminal or administrative penalties.However, only 10 states provide for even limited private right of action, which allowsthe borrower to obtain relief against the lender. Only a small number of states prohibitthe lender from threatening to file or filing criminal charges against a borrower as amechanism to collect on the debt. Finally, these payday loan laws apply only to checkcashers in 10 of the 22 states and the District of Columbia.

The Model Statute contained in this publication is designed to reduce or eliminate themost serious problems associated with payday lending. Entitled the “Deferred DepositLoan Act,” the Model Statute includes provisions that would stop the charging ofusurious fees, the rolling over or refinancing of one payday loan with another, and theuse or threatened use of the criminal courts to collect on these loans. The ModelStatute codifies TILA disclosures that lenders would be required to make andspecifies that documents be written in simple English and in the language in which thetransaction was negotiated. (For example, if the loan was negotiated in Spanish, theaccompanyiing loan documents would have to be written in Spanish.) In addition, theModel Statute contains licensing and regulatory requirements designed to facilitatestate oversight and assure compliance with the consumer protection provisions of theact. Finally, the Model Statute grants consumers a private right of action against alending operation and allows recovery of damages, fees, and costs.

The consumer protections included in the Deferred Deposit Loan Act can benefit thegrowing numbers of consumers who rely on payday loans for short-term credit. Suchprotections are essential to prevent abuses, particularly in communities that lacktraditional banking services.

George GaberlavageProject Officer

11 These states are Arizona, Arkansas, California, Colorado, Florida, Hawaii, Iowa, Kansas, Ken-tucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, North Carolina,Ohio, South Carolina, Tennessee, Texas, Utah, Washington, and Wyoming.

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This Act shall be known as the Deferred Deposit Loan Act. This Act shall beliberally construed to effectuate its purpose. The purpose of the Act is toprotect consumers who enter into short-term, high rate loans from abusesthat occur in the credit marketplace when such lenders are unregulated. ThisAct is to be construed as a consumer protection statute for all purposes.

This section sets the stage for the remainder of the act by clearly announcing thatthe legislature intends that: the act must be liberally construed to carry out itspurpose; it enunciates a specific purpose; and it is a consumer protection law.These directives will give guidance to the courts when its provisions are appliedand interpreted.

(a) Deferred deposit loan includes any arrangement in which a personaccepts a check dated on the date it was written and agrees to hold it for aperiod of days prior to deposit or presentment, or accepts a check datedsubsequent to the date it was written, and agrees to hold the check fordeposit until the date written on the check.

(b) Licensee means any person licensed by the Commissioner of __ underthe provisions of this Act to engage in deferred deposit loans or any facilita-tor as defined in Section 2(b). For purposes of all sections of this Act withthe exception of Section 4, a licensee includes any bank, savings and loanassociation, credit union, or other state or federally regulated financialinstitution.

(c) Commissioner shall mean the Commissioner of __.

(d) Person shall include any natural person, firm, partnership, association orcorporation, or other entity who makes a deferred deposit loan in this stateor any facilitator as defined in Section 2(b).

(e) Consumer shall mean any natural person who, singly or jointly withanother consumer, enters into a deferred deposit loan.

(f) Check as used in this Act shall mean a negotiable instrument as definedin Article 3 of the Uniform Commercial Code which is drawn on a bank and isto be payable on demand at maturity of the deferred deposit loan.

Only six terms are defined but they are critical:

(a) A “deferred deposit loan”12 includes a loan involving two types of checks: onethat is dated on the date written but which is held until a date in the future (the datethat

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12 This title for the loan was selected since it most accurately describes how they operate.

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payment on the loan is due) when it is to be deposited; and the other that is datedfor a date in the future at which time payment is due, and it is deposited to coverthe debt. Some state payday loan laws only apply to transactions involvingpresently dated or post-dated checks, e.g., South Carolina and Wyoming. This actprovides the broadest coverage. The use of the word “loan” is important becauseexperience indicates that the industry will characterize these transactions as“services” and the fees involved as “service fees” to attempt to circumvent statesmall loan laws and the federal Truth-In-Lending Act.

(b) A “licensee” includes not only those “persons” who make these types of loansbut also banks and other financial institutions who need not obtain a license underthis act but whose actions are, nevertheless, regulated under most of theprovisions of the act.13

(c) A “person” refers to the lender and includes natural persons and business orother entities or any facilitator (discussed below in Section 2).

(d) A “consumer” includes any natural person who enters into a deferred depositloan.

(e) The “Commissioner” is the head of the agency charged with the responsibilityof enforcing the act.

(f) A “check” is defined as a negotiable instrument as defined in Article 3 of theUniform Commercial Code which is drawn on a bank and is to be payable ondemand at maturity of the deferred deposit loan.

(a) In General. Except as otherwise provided in this section, this Act appliesto any person who, for a fee, service charge, or other consideration, acceptsa check dated on the date it was written and agrees to hold it for a period ofdays prior to deposit or presentment, or accepts a check dated subsequentto the date it was written, and agrees to hold the check for deposit until thedate written on the check.

(b) Facilitators. This Act applies to any person who facilitates, enables, oracts as a conduit for another person, who is or may be exempt from licens-ing, who makes deferred deposit loans.

(c) Financial Institutions. To the extent that banks, savings and loan asso-ciations, credit unions, or other state or federally regulated financial institu-tion are exempt by virtue of other state or federal laws from the provisions ofthis Act regarding limitations on interest rates and fees, all other provisionsexcept the requirements for licensure in Section 4 apply to these financialinstitutions.

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13 Banks and other financial institutions receive oversight from a variety of federal and stateagencies, rendering licensing under this act unnecessary. Compliance with other provisions iscrucial, however.

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(d) Evasion of Applicability. The provisions of this Act shall apply to anyperson who seeks to evade its applicability by any device, subterfuge, orpretense whatsoever.

In addition to the lenders themselves, the act establishes jurisdiction over thosewho facilitate, enable, or act as a conduit for another person who is or may beexempt from licensing but who makes deferred deposit loans. The purpose ofexpanding coverage to include such persons is to require those who act asconduits for entities, such as banks, other financial institutions, or financecompanies, to be licensed and make sure that the true lender follows the law.

An example of the problem this subsection is designed to address is the following:an out-of-state bank from a state where there is little or no regulation of theseloans arranges with an in-state check cashing company or retail store to makethese loans. The loan is in the name of the out-of-state bank, and the bank usesthe local place of business as the conduit. The bank can legally charge whatever itwishes under the law of its home state due to what is known as the “exportationdoctrine” that exists under federal law.14 However, this model act would requirethat the local conduit be licensed, and it would ensure that the out-of-state lendercomplies with local law. This provision is intended to reduce the incidence of out-of-state businesses exporting the lack of interest rate and fees cap and otherprotections in its home state to this state.

(a) Retail Sellers. Retail sellers who cash checks incidental to or indepen-dent of a sale and who charge no more than $2 per check for the service areexempt from the provisions of this Act.

(b) Financial Institutions. To the extent that banks, savings and loan asso-ciations, credit unions, or other state or federally regulated financial institu-tions are exempt by virtue of other state or federal laws from the provisionsof this Act regarding limitations on interest and rates, all other sections ofthis Act apply except Section 4.

Most state payday acts exempt certain retail sellers who only incidentally cashchecks as well as certain financial institutions. This section duplicates thoseexemptions with the exception that banks and other financial institutions need notobtain a license but must otherwise comply with this act where applicable.

(a) Necessity for License; Prerequisites to Issuance. No person shall en-gage in or offer to engage in the business regulated by this Act unless anduntil a license has been issued by the Commissioner. The Commissionershall not issue or renew any such license unless and until the followingfindings are made:

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14 See National Consumer Law Center, The Cost of Credit Ch. 3, 2nd Edition (2000).

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(1) That authorizing the applicant to engage in such business will pro-mote the convenience and advantage of the community in which theapplicant proposes to engage in business;

(2) That the financial responsibility, experience, character, and generalfitness of the applicant are such as to command the confidence ofthe public and to warrant the belief that the business will be operatedlawfully and fairly, and within the provisions and purposes of thisAct;

(3) That neither the applicant, nor any principals of the applicant (whichincludes any persons owning at least 5% of the applicant) have beenconvicted of any crimes;

(4) That the applicant has unencumbered assets of at least $25,000 perlocation;

(5) That the applicant has provided a sworn statement that the applicanthas not used in the past, nor will in the future directly or indirectlyuse the criminal process to collect the payment of deferred depositloans;

(6) Such other information as the Commissioner may deem necessary.

(b) Annual Review of Compliance with Law. No license shall be issued forlonger than one year, and no renewal of a license may be provided if licenseehas violated this Act.

(c) Public Hearing. A public hearing shall be held for each original applica-tion and for renewals if one is requested in writing by five or more membersof the public or the Commissioner.

(d) Bond. Each licensee must post a bond in the amount $50,000 per loca-tion which must continue in effect for five years after the licensee ceasesoperation in the state. Such bond must be available to pay damages andpenalties to consumers harmed by any violation of this Act.

(e) Fees. An annual fee of __ and investigative fee of ___ shall be paid byeach licensee.

(f) Business Location. Not more than one place of business shall be main-tained under the same license, but the Commissioner may issue more thanone license to the same licensee upon compliance with all the provisions ofthis Article governing issuance of a single license.

(g) Other Business. No licensee shall conduct the business of making loansunder this Act within any office, suite, room or place of business in whichany other business is solicited or engaged in unless, in the opinion of theCommissioner, such other business would not be contrary to the bestinterests of consumers and is authorized by the Commissioner in writing.

(h) Revocation of License. If the Commissioner shall find, after due noticeand hearing, or opportunity for hearing that any licensee, or an officer, agent,employee or representative thereof, has violated any of the provisions ofthis Article, or has failed to comply with the rules, regulations, instructionsor orders promulgated by the Commission, or has failed or refused to makeits reports to the Commissioner, or has furnished false information to theCommissioner, the Commissioner may issue an order revoking or suspend-ing the right of such licensee and such officer, agent, employee or represen-tative to do business in this state as a licensee. No revocation, suspension,

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or surrender of any license shall relieve the licensee from civil or criminalliability for acts committed prior thereto.(i) List of Licensees; Complaint Process; Powers of the Commissioner. TheCommissioner shall maintain a list of licensees which shall be available tointerested persons and the public. The Commissioner shall create a toll freenumber whereby consumers may obtain information about licensees. TheCommissioner shall also establish a complaint process whereby an ag-grieved consumer or any member of the public may file a complaint againsta licensee or non-licensee who violates any provision of this Act. The Com-missioner shall hold hearings upon the request of a party to the complaint,make findings of fact, conclusions of law, issue cease and desist orders,refer the matter to the appropriate law enforcement agency for prosecutionunder this Act, and suspend or revoke a license granted under this Act. Allsuch proceedings shall be open to the public.

(j) Regulations. The Commissioner may promulgate regulations to carry outthe provisions of this Act.

The act puts the burden on the Commissioner to make certain findings following apublic hearing before issuing a license. The most critical findings are those thatrelate to whether the applicant has ever been convicted of a crime, hasunencumbered assets of at least $25,000 per location, and has ever threatened orused the criminal process to collect the payment of a deferred deposit loan. Thepublic hearing is crucial as it gives the community the opportunity to providerelevant information regarding the necessity of such businesses in itsneighborhood. Licensees must renew annually.

This section also mandates that the applicant post a bond in the amount of$50,000 per location which must be available to pay damages and penalties toconsumers harmed by any violations of the act. In tandem with the assetrequirement, the bond provides a source of compensation to harmed consumers.Without these protections, these businesses could sell, transfer, or skim off theirassets and leave nothing from which a consumer could satisfy a judgmentobtained due to the illegal acts of the company.

Other important provisions include the powers given to the Commissioner toestablish a complaint process for consumers, to revoke or suspend a licenseunder certain circumstances, and to promulgate regulations to carry out theprovisions of the act.

Finally, the public is also given the right to review the list of licensees and to haveaccess to complaints that have been filed against a particular licensee, the natureof the complaint, and the resulting decision of the Commissioner.

(a) Supervision by Commissioner. Each licensee shall keep and use books,accounts, and records which will enable the Commissioner to determine ifthe licensee is complying with the provisions of the Act and maintain anyother records as required by the Commissioner. The Commissioner, ordesignee, is authorized to examine such records at any reasonable time. Allsuch records must be kept for four years following the last entry on a loanand according to generally accepted accounting procedures which meansthat an examiner must be able to review the recordkeeping and reconcileeach consumer loan with documentation maintained in the consumer’s loanfile records.

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(b) Licensee Information. Each licensee shall file an annual report with theCommissioner on or before the last day of March for the 12-month period inthe preceding year on forms prescribed by the Commissioner. Such reportsshall disclose in detail and under appropriate headings:

(1) the resources, assets, and liabilities of such licensee at the beginningand the end of the period.

(2) the income, expense, gain, loss, and a reconciliation of surplus or networth with the balance sheets, and the ratios of the profits to theassets reported.

(3) the total number of deferred deposit loans made in the calendar yearending as of December 31st of the previous year.

(4) the total number of such loans outstanding as of December 31st ofthe previous year.

(5) the minimum, maximum, and average dollar amount of checks whosedeposits were deferred in the calendar year ending as of December31st of the previous year.

(6) the average annual percentage rate and the average number of daysa deposit of a check is deferred during the calendar year ending as ofDecember 31st of the previous year.

(7) the total of returned checks, the total of checks recovered, and thetotal of checks charged off during the calendar year ending as ofDecember 31st of the previous year.

(8) verification that the licensee has not used the criminal process orcaused the criminal process to be used in the collection of anydeferred deposit loans during the calendar year ending as of Decem-ber 31st of the previous year.

Such reports shall be verified by the oath or affirmation of the owner, man-ager, or president of the licensee.

(c) Other Business. If a licensee conducts another business or is affiliatedwith other licensees under this Act, or if any other situation exists underwhich allocations of expense are necessary, the licensee shall make suchallocation according to appropriate and reasonable accounting principles asapproved by the Commissioner. Information about other business conductedon the same premises as that of deferred deposit loans shall be provided asrequired by the Commissioner.

(d) Annual Reports. The Commissioner shall compile annual reports ofdeferred deposit lending in this state from the information provided underthis Section and provide a copy to the Governor and the Legislature. Annualreports shall be available to interested parties and to the general public.

(e) Copy of Contract and Fee Schedule. Each licensee shall file a copy of thecontract described in Section 7(b) and the fee schedule described in Section7(c) with the Commissioner prior to the date of commencement of businessat each location, at the time any changes are made to the documents orschedule, and annually thereafter upon renewal of the license. These docu-ments shall be available to interested parties and to the general public.

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Licensees are mandated to keep certain books and accounts which can beexamined by the Commissioner at any reasonable time. In addition, licensees mustfile an annual report in which they must list, among other things, the number ofdeferred deposit loans, the volume of loans in dollars, the average APRs on theloans, and other important information which will be compiled by the Commissionerand made available to the public, the governor, and the legislature. Thisinformation is critical in gauging the growth of the industry and in determining if theact serves the purposes for which it is intended.

This section also requires licensees to verify that they have not used the criminalprocess or caused the criminal process to be used in the collection of any deferreddeposit loans during the prior calendar year. As noted in the introduction, the filingof check fraud charges has been used as a debt collection tactic by many paydaylenders. The verification provision is intended to severely curtail such practices.

Finally, each licensee must file a copy of the loan documents and fee scheduleswith the Commissioner. In this way, the Commissioner can evaluate compliancewith Sections 6, 7, and 8.

(a) Each deferred deposit loan must have a minimum term of no less thantwo weeks for each $50 owed on the loan.

(b) A consumer shall be permitted to make partial payments (in amountsequal to no less than $5 increments) on the loan at any time, without charge.

(c) The maximum amount of the deferred deposit loan shall not exceed $300.

(d) After each payment made, in full or in part, on any loan, the licenseeshall give to the person making such payment a signed, dated receipt show-ing the amount paid and the balance due on the loan.

(e) The minimum amount of a deferred deposit loan is $50.

(f) The check written by the consumer in a deferred deposit loan must bemade payable to the licensee.

(g) Upon receipt of the check from the consumer for a deferred deposit loan,the licensee must immediately stamp the back of the check with an endorse-ment that states: “This check is being negotiated as part of a deferreddeposit loan pursuant to [include the Code citation to this Act], and anyholder of this check takes it subject to all claims and defenses of the maker.”

(h) Any facilitator, as defined in Section 2, is subject to enforcement underSections 4 and the civil remedies provision of Section 10, if the personmaking the deferred deposit loans fails to comply with the requirements ofthis Act.

(i) The licensee must provide the consumer, or each consumer if there aremore than one, with a copy of the loan documents described in Section 7prior to the consummation of the loan.

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(j) The holder or assignee of any check written by a consumer in connectionwith a deferred deposit loan takes the instrument subject to all claims anddefenses of the consumer.

The teeth of the consumer protections in the model act appear in Sections 6-10.Section 6 obligates licensees to provide that the term of the loan be no less thantwo weeks per $50. This allows consumers a better chance of paying off the loanrather than defaulting and possibly facing criminal charges or renewing atexorbitant rates. Also, the section sets the maximum amount of the loan at $300and the minimum at $50. This is typical of several other state payday loan laws.

What is not common is a provision in Section 6 which requires the licensee toimmediately stamp the back of a check taken from the consumer in the course of adeferred deposit transaction with an endorsement that states fundamentalinformation for two different audiences: first, the endorsement states that the checkis being negotiated as part of a deferred deposit loan. This lets the courts andprosecuting attorneys know that this check cannot be the subject of a criminalprosecution since this is prohibited under Section 9. Second, the endorsementstates that any holder of the check takes it subject to all claims and defenses of themaker. In other words, if the check is sold to an assignee, the consumer can stillraise claims and defenses he or she had with the original lender against anysubsequent holder. This provision is similar to the Federal Trade Commission rulewhich eliminates limitations on assignee liability for consumer claims or defenses incredit transactions involving the sale of goods.15

(a) Information Pamphlet Provided to All Consumers. Before entering into adeferred deposit loan, the licensee shall deliver to the consumer a pamphletprepared by the Commissioner which explains, in simple English and Span-ish, all of the consumer’s rights and responsibilities in a deferred depositloan transaction, includes a toll free number to the Commissioner’s office tohandle concerns or complaints by consumers, and informs consumers thatthe Commissioner’s office can provide information about whether a lender islicensed, whether complaints have been filed with the Commissioner, and theresolution of such complaints.

(b) Loan Documents. Licensees shall provide consumers with a writtenagreement on a form specified or approved by the Commissioner that can bekept by the consumer, and must include the following information in Englishand in the language in which the loan was negotiated:

(1) The name, address, telephone number of the licensee making thedeferred deposit loan, and the name and title of the individual em-ployee who signs the agreement on behalf of the licensee;

(2) An itemization of the fees and interest charges to be paid by theconsumer;

(3) Disclosures required by the federal Truth in Lending Act, regardlessof whether the Truth in Lending Act applies to the particular deferreddeposit loan;

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(4) Disclosures required under any other state law;(5) A clear description of the consumer’s payment obligations under theloan;(6) In a manner which is more conspicuous than the other informationprovided in the loan document and is in at least 14 point bold type face, astatement that “you cannot be prosecuted in criminal court to collect thisloan.”

Such notice shall be located immediately preceding the signature of theconsumer.

(c) Posting Requirements. The following notices in English, Spanish, as wellas other languages in which a significant amount of deferred deposit loanbusiness is conducted, must be conspicuously posted by all licensees ineach location of a business providing deferred deposit loans:

(1) Informs consumers that the licensee cannot use the criminal processagainst a consumer to collect any deferred deposit loan.

(2) The schedule of all interest and fees to be charged on such loanswith an example of the amounts that would be charged on a $300loan payable in 14 days and 30 days, giving the correspondingannual percentage rate.

(d) Posting Requirements for Financial Institutions Not Governed by Section8 on Permitted Fees. Financial institutions making deferred deposit loans,which, because of the application of other state or federal law, are exemptfrom the fee limitations of this Act in Section 8, and which charge fees,interest, and charges greater than that authorized in Section 8 of this Act,must post, in a conspicuous place in the branch in which the deferreddeposit loans are entered into, the notice below. A single instance ofcharging a consumer more than the fees, interest, and other charges permit-ted in Section 8 requires the financial institution to post this notice.

“WARNING: The fees and interest charged on deferred deposit loans made atthis institution are higher than those charged at other financial institutions.”

This section describes the disclosures which must be given to consumers prior toentering into a deferred deposit loan. These include:

1) an informational pamphlet notifying the consumers of their rights in bothEnglish and Spanish and explaining how to contact the Commissioner toinvestigate a lender or to file a complaint;

2) a written agreement, in English and in the language in which the loan wasnegotiated, informing the consumer about the terms of the loan, includingan itemization of the fees and charges to be paid, Truth-In-Lending Act(TILA) disclosures, a clear description of the consumer’s repaymentobligations, and a statement printed in bold type informing the consumerthat he or she cannot be criminally prosecuted if the check does not clearthe bank;

3) posted notices in various languages informing consumers that the licenseecannot use criminal process against them to collect the debt and listing theschedule of interest and fees to be charged.

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In addition to these other disclosures, financial institutions which are exempt fromthe interest rate and fee cap in Section 8 must post a warning informingconsumers, where applicable, that the fees charged on these loans are higher thanthose charged at other financial institutions.

No licensee shall charge or receive, directly or indirectly, any interest, fees,or charges except those specifically authorized by this Section.

(a) Fees. A licensee shall be permitted to charge an administrative fee of nomore than $5 for each deferred deposit loan entered into with a consumer.

(b) Interest. In addition to the administrative fee, the licensee shall be permit-ted to charge interest on the amount of cash delivered to the consumer in adeferred deposit loan in an amount no greater than 36% per annum (definedas a 365-day year). The rate charged on the outstanding balance after matu-rity shall not be greater than the rate charged during the loan term. Chargeson loans shall be computed and paid only as a percentage of the unpaidprincipal balance. Principal balance means the balance due and owed exclu-sive of any interest, service charges, or other loan-related charges.

(c) Insufficient Fund Fee. If there are insufficient funds to pay a check on thedate of presentment, a licensee may charge a fee, not to exceed the lesser of$15 or the fee imposed upon the licensee by the financial institution. Onlyone such fee may be collected with respect to a particular check even if ithas been redeposited and returned more than once. A fee charged pursuantto this subsection is a licensee’s exclusive charge for late payment.

(d) Rebates of Unearned Charges. When a loan is repaid before its due date,unearned interest charges must be rebated to the consumer based on amethod at least as favorable to the consumer as the actuarial method.

This is one of the most important provisions of the act. It is designed to curb theexorbitant fees and charges that are currently the norm in this industry whileallowing lenders a reasonable rate of return for the risk they take by making small,unsecured loans (though this risk is significantly reduced by holding a negotiablecheck).

The interest rate is set at 36% per year (or 1.38% per two-week period) on theamount of cash paid to the consumer. This rate cap is compatible with those instates which have retained interest rate caps under their small loan acts. Inaddition, lenders can charge an administrative fee of up to $5. On a loan in whichthe borrower receives $200 in cash (face amount is $207.76 [$200 + $2.76 interest+ $5 fee]) and is payable in two weeks, the interest and fee translate into an APRof 100.88%, far below what the industry commands at the present time. If thissame loan (face amount is $211 [$200 + $6 interest + $5 fee] were repayable in 30days, the APR drops to 66%. If the interest rate cap is raised, the minimum termrequirement in Section 6 should be reviewed. The longer the term, the moreinterest in actual dollars will be reaped by the lender. It may be less favorable toconsumers to allow an extended term if the interest cap is raised beyond the 36%in the model act.

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If a check is returned for insufficient funds, lenders may charge a one-time fee ofthe lesser of $15 or the charge imposed by the financial institution. California'sstatute contains a similar provision.

Finally, if the loan is repaid before its due date, any unearned interest must berefunded using a formula at least as favorable to the consumer as the actuarialmethod. This provision outlaws the use of the lender-friendly Rule of 78s.16

No licensee making deferred deposit loans shall commit, or have committedon behalf of the licensee, any of the following prohibited acts:

(a) Engaging in the business of deferred deposit lending unless the Com-missioner has first issued a valid license.

(b) Threatening to use or using the criminal process in this or any otherstate to collect on the loan.

(c) Altering the date or any other information on the check.

(d) Using any device or agreement which would have the effect of chargingor collecting more fees, charges, or interest than allowed by this Act, includ-ing but not limited to entering into a different type of transaction with theconsumer.

(e) Engaging in unfair, deceptive, or fraudulent practices in the making orcollecting of a deferred deposit loan.

(f) Entering into a deferred deposit loan with a consumer which is uncon-scionable. In determining whether a deferred deposit loan transaction isunconscionable, consideration shall be given to, but is not limited to,whether the amount of the loan exceeds 25% of the consumer’s net incomefor the term of the loan.

(g) Charging to cash a check representing the proceeds of the deferreddeposit loan.

(h) Using or attempting to use the check provided by the consumer in adeferred deposit loan as security for purposes of any state or federal law.

(i) Accepting payment of the deferred deposit loan through the proceeds ofanother deferred deposit loan provided by the same licensee or any affiliate.

(j) Making more than one deferred deposit loan to a consumer at a time.

(k) Making a deferred deposit loan, which, when combined with anotheroutstanding deferred deposit loan owed to another licensee, exceeds a totalof $300 when combining the face amount of the checks written in connectionwith each loan. The licensee shall make inquiry of the consumer or utilize

16 A mathemathical formula used to estimate refunds of prepaid interest and insurance chargeswhen a loan is repaid early. Hand-held calculators can easily perform more accurate actuarialcalculations. Use of the rule typically results in a smaller refund for the borrower.

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available information bases to determine whether such loans are outstand-ing. In no event, shall a licensee make a loan to a consumer who has two ormore such loans outstanding, regardless of the total value of the loans.

(l) Renewing, repaying, refinancing, or consolidating a deferred deposit loanwith the proceeds of another deferred deposit loan made by the same con-sumer. Upon termination of a deferred deposit loan through the payment ofthe consumer’s check by the drawee bank, the return of a check to a con-sumer who redeems it for consideration, or any other method of termination,the licensee shall not enter into another deferred deposit loan with the sameconsumer for at least 30 days thereafter, provided, that a licensee mayextend the term of the loan beyond the due date without charge.

(m) Accepting any collateral for a deferred deposit loan.

(n) Charging any interest, fees, or charges other than those specificallyauthorized by this Act, including but not limited to:

(1) charges for insurance;(2) attorneys fees or other collection costs.

(o) Threatening to take any action against a consumer that is prohibited bythis Act, or making any misleading or deceptive statements regarding thedeferred deposit loan or any consequences thereof.

(p) Making a misrepresentation of a material fact by an applicant in obtainingor attempting to obtain a license.

(q) Including any of the following provisions in loan documents required bySection 7(b):

(1) A hold harmless clause;(2) A confession of judgment clause;(3) A waiver of the right to a jury trial, if applicable, in any action brought

by or against a consumer;(4) A mandatory arbitration clause;(5) Any assignment of or order for payment of wages or other compen-

sation for services;(6) A provision in which the consumer agrees not to assert any claim or

defense arising out of the contract;(7) A waiver of any provision of the Act.

(r) Selling any insurance of any kind whether or not sold in connection withthe making or collecting of a deferred deposit loan.

The list of prohibited acts in this section is crucial to protecting consumers fromabusive behavior. Among the most significant are: 1) engaging in unfair, deceptive,or fraudulent practices in the making or collecting of a deferred deposit loan, 2)entering into an unconscionable transaction with a consumer, repaying orrefinancing a deferred deposit loan with the proceeds of another, 3) threatening touse or using the criminal process in this or any other state to collect on the loan, 4)entering into another such loan with a consumer for at least 30 days (to stoprollovers and prevent the use of subterfuges, like loan splitting, to evade the act), 5)

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including certain harmful provisions in the loan (such as a hold harmless provisionthat would allow a lender to take any action against a borrower without liability or aconfession of judgment clause that permits a lender to obtain a judgment against aborrower without serving papers or permitting a defense), and 6) selling insurance.

(a) Civil. The remedies provided herein are cumulative and apply to licens-ees and unlicensed persons to whom this Act applies and who failed toobtain a license:

(1) Any violation of any state law prohibiting unfair or deceptive tradepractices constitutes a violation of this Act.

(2) Any violation of this Act constitutes a violation of any state lawprohibiting unfair or deceptive trade practices.

(3) The violation of any provision of this Act, or regulation thereunder,except as the result of accidental or bona fide error of computation,renders the loan void, and the person shall have no right to collect,receive, or retain any principal, interest, or other charges whatsoeverwith respect to the loan.

(4) Any person found to have violated this Act shall be liable to theconsumer for actual, consequential, and punitive damages, plusstatutory damages of $1000 for each violation (to be increased by theCommissioner to reflect inflation), plus costs, and attorneys fees.

(5) A consumer may sue for injunctive and other appropriate equitablerelief to stop any person from violating any provisions of this Act.

(6) The consumer may bring a class action suit to enforce this Act.(7) The remedies provided in this section are not intended to be the

exclusive remedies available to a consumer nor must the consumerexhaust any administrative remedies provided under this Act or anyother applicable law.

(b) Criminal. Any person, including members, officers, and directors of theperson who knowingly violates this act is guilty of a misdemeanor and, onconviction, is subject to a fine not exceeding $1,000 or is subject to impris-onment not exceeding 6 months, or both.

This section has two subparts which provide for civil and criminal remedies. Thecivil remedy gives individual consumers a private right of action, enabling them toenforce provisions of the act. This right permits consumers to directly sue lendersand to seek relief for the wrongs performed by licensed and unlicensed violators.Agency enforcement through the complaint process alone may be inadequate,given the growth of the industry and the fact that agencies often do not havesufficient resources to investigate problems and undertake enforcement actions.Providing consumers with the right to seek relief directly is one of the keyprovisions of the act. Thus, this section allows the consumer to sue for actual,consequential, and punitive damages and imposes a statutory penalty of $1000 perviolation. This penalty is important because the actual damages in these casesmay be small given the size of the loans. The recovery of actual damages alonemay not deter a business from violating this act again. For this reason, and toassist groups of borrowers who have been injured by violation, a provision allowingfor class actions is also included.

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Criminal penalties are an important deterrent to abuses of the act. Any knowingviolation of the act is a misdemeanor and subjects the violator to a $1,000 fine orimprisonment not to exceed six months or both.

If any portion of this Act is determined to be invalid for any reason by a finalnonappealable order of any court of this state or of a federal court of compe-tent jurisdiction, then it shall be severed from this Act. All other provisions ofthis Act shall remain in full force and effect.

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None. Small loan act applies. Ala. Code §5-18-1 et seq. (interest is limited tothree percent per month for amounts up to $200 and two percent per month onamounts of $201-$749).**

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None. Small loan act applies. Alaska Stat. §06.20.230 et seq. (36 percent peryear interest rate cap).

**The percentage or numbers in parentheses following the legal citation for a smallor other consumer loan law is the interest rate cap imposed by the law in that state.

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(effective Sept. 1, 2000; sunsets on July 1, 2010)

Applicability: The statute applies to any transaction made pursuant to a writtenagreement in which a licensee accepts a check and agrees to hold it for a period oftime before presentment for payment or deposit.

Exemptions: Banks, savings and loan associations, or financing/lending institu-tions authorized or licensed to transact business under the laws of the UnitedStates or Arizona are exempt. Any person that is principally engaged in the retailsale of goods or services and who from time to time cashes checks, drafts, ormoney orders for a fee or other consideration which does not exceed $2.00 isexempt.

Licensing Requirements: Applicants must provide required information, includinga financial statement and a credit report. An applicant must be a U.S. citizen, nothave been convicted of a crime that involves moral turpitude, and not have de-faulted on payment of money collected. A licensee must have a minimum networth in cash or cash equivalent of at least $50,000. Licenses are renewedannually. There are certain reasons for revocation or suspension of licenses arelisted, including violating this law.

Disclosures: A licensee must: 1) conspicuously post a notice that states the feescharged at every location that is licensed, and 2) have a written agreement foreach loan that contains the name of the licensee, the transaction date, the amountof the check, the amount to be paid by the consumer, and a statement of the totalamount of the fees charged, expressed as both a dollar amount and as an annualpercentage rate (in compliance with state and federal truth in lending laws). Thewritten agreement must also state prominently: “No customer may have outstand-ing more than one deferred presentment service agreement at one time and theface amount, exclusive of fees, cannot be more than $500.”

Prohibited Acts: Prohibited acts include: failing to pay annual renewal fees or filethe annual financial statement; insolvency; violating the act; conviction of any crimewhich is a felony or other crime that is a breach of trust or dishonesty; making amaterial misstatement or omission on the application for a license; operatingwithout a license for each location from which the business is conducted; making aloan without first obtaining reasonable evidence that the account on which thecheck is drawn is open and active; making loans or extensions of credit other thanthose allowed under this law; advertising in any way which contains false, mislead-ing, or deceptive statements; engaging in unfair or fraudulent practices; altering ordeleting the date on the check accepted by the licensee; accepting an undatedcheck; failing to take measures to ensure that no customer has more than onedeferred presentment loan outstanding at any time with any licensed lender in thestate; requiring security for the loan other than the check or requiring a guarantee;and providing gaming or lottery tickets, alcoholic beverages, or requiring thepurchase of other goods and services in order to get a loan at any licensed loca-tion. A licensee may not use the criminal process to collect on a deferred present-ment loan.

Permitted Charges: Not more than 15 percent of face amount of the check. Thisfee can be charged only once for each transaction. The fee is earned at the outsetand need not be refunded if the consumer repays early. The fee is not interest forany purposes.

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�� Loan Terms: The loan can be no greater than $500, excluding the permitted fees.The loan agreement must be in writing; and cannot be extended more than threeconsecutive times. For each extension, the licensee shall terminate the previousagreement and sign a separate agreement. The licensee may charge the permit-ted fee for each extension.

Enforcement: Criminal penalties for making loans without a license is a misde-meanor. The license can be revoked for violation of the law.

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Check-Cashers Act of 1999 (not yet codified). Otherwise, maximum interest ratein state constitution applies. Ark. Const. art. 19, §13. (17 percent per year interestrate cap).

Applicability: To a person that for compensation engages in the check-cashingbusiness and who, pursuant to a written agreement, accepts personal checks onthe date they were written, pays the customer an amount less than the face valueof the check and grants the customer the “option to repurchase” the check for anagreed period of time prior to presentment of the check.

Exemptions: The United States or state governments, any federally or statechartered bank, savings and loan association, credit union; any retail seller en-gaged in the retail sale of goods or services who from time to time cashes checks,drafts, or money orders provided that the revenue from such fees does not exceedthree percent of gross revenues.

Permit Requirements: State Board of Collection Agencies enforces. Must submitapplication and financial statement, pay a permit fee of $500. Must be renewedannually (renewal fee is $400). Must show liquid assets of at least $20,000 for theoperation of each location. Must post a bond payable to the State of Arkansas of$50,000. Must show financial responsibility and business experience. A permitmay be denied if the registrant has a felony conviction involving dishonesty, fraud,or deceit and the crime is substantially related to the qualifications, function, dutiesof a person engaged in this business.

Permitted Fees: A reasonable administrative fee not to exceed $10 plus 10percent of the face amount of the check and no more than $5 to set up the accountand issue an identification card (which are not deemed interest for any purposeand the transaction is not a loan).

Loan Terms: The agreement must contain a clear and understandable explana-tion of the fees and the date on which the check will be cashed, the total amount ofany fees charged expressed in a dollar amount and as an annual percentage rate.If the check casher accepts partial payment, the check may not be deposited normay another fee be imposed. Loan term can be no fewer than six calendar daysnor more than 31 days. Check amount cannot exceed $400. If a check is re-turned, the check casher has the right to all civil remedies allowed by law to collectthe check and be entitled to recover any returned check fee authorized by statelaw and reasonable attorney’s fees paid to a non-employee and costs. Must payproceeds of check in cash to consumer.

Prohibited Acts: Cannot pursue criminal charges for bad checks, unless thecheck casher would otherwise to entitled to file such charges under state law ANDthe check is returned to the check casher because the account was closed orpayment was stopped. Cannot accept security for the transaction. Cannot alter ordelete the date on any check. Cannot accept an undated check or a check datedon a date other than the date of the transaction. Cannot have more than onedeferred presentment check outstanding at any time from any one customer.Cannot renew or consolidate one deferred presentment check with the proceeds ofanother. Cannot conduct any other business at same location without first obtain-ing prior permission of the Department.

Disclosures: Must post a schedule of all fees. Must provide a written agreementwhich is signed by the check maker (consumer). The agreement must contain a

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clear and understandable explanation of the fees and the date on which the checkwill be cashed, the total amount of any fees charged expressed in a dollar amountand as an annual percentage rate. A copy must be given to the consumer. Mustpost permit conspicuously in the office.

Enforcement Actions: The Department can suspend or revoke the permit if thecheck casher has knowingly or through lack of due care failed to pay the annualfee, violated any provision of the act, made a false statement in the application,etc. Can also issue a cease or desist order and require the check casher to refundany fees collected in violation of the act. Can inspect books and records at anyreasonable time. The Attorney General also has the specific authority to investi-gate any complaints of any deceptive trade practices. The Department hasauthority to issue subpoenas, administer oaths, conduct hearings and compel theproduction of documents.

Penalties: The Department can impose a fine of up to $1,000 per transaction.Wilfully engaging in the check-cashing business in violation of the act is a misde-meanor.

Private Right of Action: Any action for a civil remedy by the Department or by anyother person must be commenced within five years of the act complained of.

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Applicability: To check cashers only. Consumer loan act applies to other lenders.Cal. Fin. Code §22201 et seq. (Interest rate cap under state’s small or consumerloan act is 2.5 percent per month on up to $225; two percent per month on $226 to$900.)

Exemptions: State or federally chartered banks, savings associations, creditunions, or industrial loan companies, retail sellers which cash checks or issuemoney orders as a service that is incidental to its main purpose or business.

Permit Requirements: Must have a check cashers permit with Department ofJustice.

Prohibited Acts: Cannot have more than one deferred payment agreementoutstanding at a time; cannot prosecute consumer for failure to comply with anyagreement. Cannot accept collateral.

Permitted Charges: Not to exceed 15 percent of face value of check; $15 forreturn of dishonored check.

Disclosure: Must have a written agreement signed by customer which containsthe total amount of fees charged in dollars and as an APR. Agreement mustauthorize the check casher to defer deposit of the personal check until a specificdate not later than 30 days from the date the agreement was signed.

Loan Terms: The face amount of the check cannot exceed $300.

Civil/Criminal Penalties: Civil penalty up to $2,000, and violation is a misde-meanor if willful.

Private Right of Action: Yes. Consumer can bring action for damages up to threetimes the damages actually incurred capped by the amount the consumer actuallypaid to the lender plus attorney’s fees and costs. If the violation is willful, canobtain punitive damages. Can also seek equitable relief.

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5 Colo. Rev. Stat. §§5-3-501 et seq. (effective July 1, 2000)

Applicability: The statute applies to deferred deposit loans whereby the lender, fora fee, accepts a dated intrument from the consumer, agrees to hold it for a periodof time prior to negotiation or deposit, and pays to the consumer the amount of theinstrument less finance charges as permitted. One who acts as an agent for a thirdparty is covered even if the third party is exempt.

Exemptions: Lenders not covered as supervised lenders under §5-1-301(17) areexempt. Banks and other financial institutions that may be exempt by federal lawfrom the interest rate limitations are, nevertheless, subject to all other provisions.

Permitted Charges: 36 percent per year interest on balances of $630 or less; 21percent on balance of $630-$2,100. If contracted for, $20 for return of dishonoredcheck.

License Requirements: Lenders must be licensed.

Permitted Charges: Not more than 20 percent of the first $300 plus 7.5 percent ofthe excess may be charged. Loans can be renewed once and the renewal fee canbe no more than 20 percent of the first $300 plus 7.5 percent of the excess. Thelender must refund a prorated portion of the finance charge if the renewal occursbefore the maturity date of the loan. Lender may contract to receive a $25 fee if,upon deposit, the consumer's check is returned for insufficient funds, plus courtcosts and reasonable attorney fees in the event of default.

Disclosure: The licensee must reduce the agreement to writing and contain thename of the consumer, the transaction date, the amount of the check, the annualpercentage rate, the total amount of the finance charges charged, expressed bothas a dollar amount and as an annual percentage rate and other disclosuresrequired for supervised lenders. In addition, the following notice must be promi-nently placed in the loan agreement in at least 10-point type:

A deferred deposit loan is not intended to meet long-term financial needs.A deferred deposit loan should be used only to meet short-term cashneeds.Renewing the deferred deposit loan rather than paying the debt in full willrequire additional finance charge.State law prohibits deferred deposit loans exceeding $500 total debt from adeferred deposit lender. Exceeding this amount may create financialhardships for you and your family. You have the right to rescind thistransaction by 5 P.M. the next business day following this transaction.

The lender must also post a notice of the charges imposed for such loans at itsplace of business. Prior to sellling or assigning the check or loan, the lender mustplace a notice on the check in at least 10-point type which says: "This is a deferreddeposit loan instrument."

Prohibited Acts: The lender may not make a deferred deposit loan without alicense. A licensee may not engage in unfair or deceptive acts, practices, oradvertising in connection with deferred deposit loans. The licensee may notchange its location without giving the administrator advance written notice. Thelicensee may not make loans at a location for which it does not have a license orengage in business under any name other than that on the license. A loan shall notbe

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renewed more than once. If the loan is not paid after one renewal, the lender maydeposit the check. The lender cannot charge a fee for cashing the lender's check.The lender cannot present a check for payment unless it is endorsed with theactual business name of the lender. The lender cannot attempt to collect on theloan or check by using the criminal process. Provisions of Colorado law regulatingother lenders are applicable unless inconsistent with this act.

Loan Terms: Loan cannot be greater than $500 exlusive of the finance charge.

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None. Usury act applies or small loan act applies. Conn. Gen. Stat. §§36a-563. ($17for each $100 borrowed up to $600 [maximum fee: $17x6]).

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Delaware Code Ann. tit. 5, §2744.

Check cashers are prohibited from advancing any monies on a postdated check.

Small loan act applies to other lenders but no limit on interest rate (contract rate). Del.Code Ann. tit. 5 §2229.

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D.C. Code Ann. §28-4701 et seq. (1998 Supp.) (“Check Cashers Act of 1998")

Applicability: To check cashers. Consumer loan act applies to other lenders.D.C. Code Ann. §26-701 et seq. (24 percent per year interest rate cap).

Exemptions: Banks, building and loan associations, credit unions, trust compa-nies, savings and loan associations; the United States Postal Service; any personwho cashes checks for free.

License Requirements: Superintendent of the Office of Banking and FinancialInstitutions. Must apply in writing which includes certain information, pay a fee of$300, obtain a $5,000 bond, demonstrate the availability of capital of at least$25,000 at each location, demonstrate that business will be conducted honestlyand fairly. Must renew annually.

Permitted Charges: 10 percent of the face amount of the check; and, if thelicensee enters into an agreement with the customer, may charge an additional fee(to cover verification, handling, and documentation processing) of no more than $5on a personal check with a face amount of up to $250; $10—$250.01 to $500;$15—$500.01 to $750; $20—$750.01 to $1,000.

Prohibited Acts: Cannot accept post-dated checks; the personal check must bearan issue date of not later than the date the check is cashed and the deferreddeposit agreement is originated; cannot hold a check for longer than 31 daysfollowing the issue date of the check.

Required Acts: Must display license conspicuously; must give a receipt for thetransaction.

Disclosure: Must conspicuously post in both English and Spanish a schedule offees and charges permitted under the act which must be approved by the Superin-tendent of the Office of Banking and Financial Institutions.

Loan Terms: The aggregate face amount of the checks being held for deferreddeposit cannot exceed $1,000. Minimum amount cannot be less than $50.

Civil/Criminal Penalties: None.

Enforcement: Superintendent may seek a cease and desist order and seek tosuspend or revoke a license.

Private Right of Action: None specified.

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Fla. Stat. Ann. §560.201 et seq.; Fla. Admin. Code Ann. R. 3C-560.101 et seq.

Applicability: Check cashers, payment instrument sellers, funds transmitters,foreign currency exchangers. Otherwise, consumer finance act applies. Fla. Stat.Ann. §516.031. (30 percent per year interest rate cap).

Registration Requirements: Division of Banking enforces. For check cashers,must pay $250 fee and $500 renewal fee plus $50 fee for each location. Renewalevery two years. Bond required in an amount set by DBF-C-94 but cannot exceed$250,000 except in extraordinary circumstances and must remain in place for fiveyears after the registrant ceases operations in the state.

Disclosures: Must post a clearly legible schedule of fees charged in a conspicu-ous place, i.e., a place reasonably calculated to impart the information to the public.

Permitted fees: 10 percent of face amount of personal check or $5, whichever isgreater, plus a $5 verification fee per transaction.

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None. Industrial loan act applies (Ga. Code Ann. §7-3-14)(10 percent per yeardiscount interest plus fee of eight percent up to $600 plus four percent on theexcess). Check cashers are required to send checks for deposit to their accountsat the depository institution not later than the close of business on the next busi-ness day after the date on which the check was cashed. Ga. Comp. R. Regs. r. 80§3- 1.02(7).

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which allows deferred deposit transactions. The act will terminate by its terms on7/1/2001. Until this act, the small loan act applied. Haw. Rev. Stat. §412:9-100 (24percent per year interest rate cap).

Applicability: To any transaction in which a check casher refrains from depositinga personal check written by a customer until a date after the transaction datepursuant to a written agreement.

Exemptions: Does not apply to any person who is principally engaged in the bonafide sale of goods or services and who from time to time cashes items for a fee fornot more than $2 or two percent of the amount of the check, whichever is greater;to any bank, or financial institution organized under the laws of the United States orany state or territory.

Disclosures: Must post the fees charged in a conspicuous place in the businessand a notice that complaints may be filed with the Department of Commerce andConsumer Affairs. Must also provide the consumer with written notice of the feesthat is separate from and in addition to the posted notice. Must obtain writtenacknowledgment from the customer that written notice of the fees was providedand provide each consumer with a receipt documenting any and all fees charged.Deferred deposit transaction must be in writing, and it shall contain the statementof the total amount of any fees charged, expressed both in U.S. dollar amount andas an annual percentage rate.

Permitted Fees: Not to exceed 15 percent of the face amount of the check.Dishonored check fee cannot be more than $20.

Prohibited Acts: No collateral products, e.g., insurance, can be sold. Deferreddeposit cannot exceed 31 days. No collateral may be accepted to secure the loan.Face amount of the loan cannot exceed $300. A check casher cannot enter intoanother agreement with a consumer during a period of time that an earlier agree-ment is in effect. Cannot repay, refinance, or consolidate one transaction by orwith the proceeds of another. Cannot take any action to collect on a check passedwith insufficient funds except to charge and recover the dishonored check fee.Cannot prosecute customer for criminal violations unless the check is dishonoredbecause of stopped payment on the check.

Private Right of Action: Any injured consumer may seek remedies allowed byHaw. Rev. Stat. §480-13(b). Any violation of this act constitutes an unfair anddeceptive trade practice under state law. Any person injured by a wilful violation ofthe act may bring an action for the recovery of damages and seek to enjoin theviolations. Plaintiff shall be awarded damages of not less than $1,000 or threetimes the damages, whichever is greater, reasonable attorneys’ fees and costs.

Criminal/Civil Penalties: A wilful violation is punishable by a fine of up to $500and up to 30 days imprisonment. Penalties are cumulative with any other whichare otherwise available for the same conduct.

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None. Idaho credit code applies. Allows interest at any contract rate. Idaho Code§28-42-201.

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None. Ill. Consumer Installments Loan Act allows interest at rate agreed upon.205 Ill. Comp. Stat. 670/15.

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None. Uniform consumer credit code applies. Ind. Code §24-4.5-3-501 et seq.(36 percent per year interest rate cap or $33). This ability to charge $33 on a smallloan effectively allows payday lenders to operate in this state as long as theycomply with the other provisions of the UCCC.

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Applicability: To a person who accepts a check dated subsequent to the date itwas written or who accepts a check dated on the date it was written and holds thecheck for a period of time prior to deposit. Otherwise, UCCC applies. (36 percentper year interest rate cap for unsupervised loans).

Exemptions: Banks incorporated under the provisions of state or federal law, asavings and loan association, a credit union, a licensed industrial loan company.

Licensing Requirements: An applicant must execute a bond in the amount of$25,000 and pay a fee of $150. The Superintendent of Banking will issue a licenseif the applicant can conduct the business honestly and fairly, has not been con-victed of a felony, is financially responsible, and has unencumbered assets of atleast $25,000. Enforced by the Division of Banking in the Department of Com-merce.

Permitted Charges: $15 on first $100 of the face amount of a check; $10 onsubsequent $100 increments or a pro rata portion of $100 face value.

Prohibited Acts: A person cannot operate a delayed deposit services business inthis state unless the person is licensed by the Superintendent. A licensee cannot:hold any more than two checks at a time from the same person; hold checksaggregating more than $500 at any one time; require the maker to receive pay-ment by a method which causes the maker to pay additional fees; repay, refinance,or otherwise consolidate a postdated check transaction with the proceeds ofanother postdated check transaction made by the same licensee (by InterpretiveBulletin, this means that the licensee must wait at least one day between deposit-ing or redeeming a check and the acceptance of a new postdated check unless theaggregate amount of the check maturing and the new check being written do notexceed $500 in which case this can be done on the same day.); charge more thanallowed under the act; collect more than one Not Sufficient Funds (NSF) charge onone check no matter how long the check remains unpaid.

Disclosure: Licensee shall give the maker notice written in clear, understandablelanguage; the APR on the first $100 and the APR on the subsequent $100 incre-ments if different; the date on which the check will be deposited, all fees, charges,and penalties for all services in all branches.

Loan Terms: The face amount of the checks held at any one time cannot exceed$500. The number of checks held for any one maker may not exceed two.

Civil/Criminal Penalties: The Superintendent of Banking can impose a fine of upto $5,000 for each violation of the act. A person who operates without a license isguilty of a misdemeanor.

Enforcement: The Superintendent of Banking can suspend or revoke a licenseand issue cease and desist order. If a pattern and practice of violating the act isoccurring, the attorney general can initiate an action to enjoin the wrongdoer.

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Kan. Stat. Ann. §16a-2-404. (A provision amending the UCCC)

Applicability: To consumer loan transactions in which cash is advanced, with ashort term, a single repayment is anticipated, and in an amount less than $780(which amount is adjustable based upon an index). Otherwise, UCCC applies. (36percent per year interest rate cap for unsupervised loans).

Licensing Requirements: Same as under UCCC. Enforced by the ConsumerCredit Commissioner.

Permitted Charges: $5.50 for amounts of $0 to $50; 10 percent of loan proceedsand $5 administrative fee for amounts $50 to $100; seven percent of loan proceedswith a minimum of $10, plus a $5 administrative fee for amounts $100 to $250; sixpercent of the loan proceeds with a minimum of $17.50, plus a $5 administrativefee for amounts $250 to $300. On a consumer loan transaction in which cash isadvanced in exchange for a personal check, a return check charge may be as-sessed if the check is deemed insufficient.

Prohibited Acts: Any loan made under this section cannot be paid by proceeds ofanother loan by the same lender nor can the proceeds from any loan under thissection be applied to any other loan from the same lender or related lender. Thepost-maturity contract rate of any loan cannot exceed three percent per month ofthe loan proceeds. No insurance charges or other charges are permitted, includingany charges for cashing the loan proceeds if they are given in check form, unlessexpressly provided in this section. To determine whether a consumer loan transac-tion is unconscionable, consideration shall be given to the ability of the borrower torepay within the terms of the loan made under this section or whether the amountand term of the loan comply with the provisions of this section.

Loan Terms: Amount of loan limited to $780 or less in 1996 (annually adjusted).The maximum loan term permitted is 30 days.

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Applicability: To check cashers and payday lenders, i.e., accepting a check andholding the check for a period of time prior to deposit in accordance with an expressor implied agreement. Consumer loan law applies to other lenders. Ky. Rev. Stat.Ann. §288.530. (36 percent per year interest rate cap).

Exemptions: Any bank, savings and loan association, trust company, credit union, orindustrial loan corporation authorized to do business in the state; anyone who casheschecks for free, and any retail sellers who cash checks or issue money orders as aservice that is incidental to or independent of a retail sale.

Licensing: Lender must apply and deposit an irrevocable letter of credit in an amountranging from $50,000 to $200,000, depending on the lender’s number of locations;show financial responsibility; disclose criminal activity, fraud, any act constituting abreach of fiduciary duty; intend to comply with all worker’s compensation and unem-ployment laws of the state; and pay a fee of $500. License renewed annually. Lend-ers must file annual reports but information is confidential. Enforced by the Depart-ment of Financial Institutions.

Permitted Charges: Not to exceed $15 per $100 of the face amount of the check fora period of 14 days. Can prorate any fee, based upon the maximum fee of $15. Feeshall be deemed a service charge, not interest. Lender cannot require any security orguarantor; cannot have more than one transaction from any one customer at any onetime with a face value greater than $500; cannot use any device or agreement withthe intent to obtain greater charges than are authorized by this section; cannot hold adeferred deposit transaction for more than 60 days; cannot for a fee renew, roll over,or otherwise consolidate a deferred deposit transaction for a customer; cannotprosecute or threaten to prosecute. Must inquire whether a customer has anyoutstanding deferred deposit transaction outstanding with any licensee and can onlyenter into another with that customer if he/she represents in writing that there is nomore than one other and it is less than $500. Both transactions cannot exceed $500.

Disclosure: Lender must post license in conspicuous place at place of business.Must have a written agreement, dated and signed by the customer and licensee.Copy to customer. Must conspicuously display a sign that states: “No person whoenters into a post-dated check or deferred deposit check transaction with this busi-ness establishment will be prosecuted or convicted of writing cold checks or of theftby deception.” Must give Truth In Lending Act (TILA) disclosures. Must conspicu-ously display the schedule of all fees and charges for services.

Prohibited Acts: No licensee shall engage in unfair or deceptive acts, practices oradvertising in the conducting of its business.

Loan Terms: Must make TILA disclosures. Must disclose check collection chargesfor a returned or dishonored check in contract in order to collect such fees.

Enforcement: Commissioner may suspend or revoke a license. Customer may makea written complaint to the Commissioner who may investigate.

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La. Rev. Stat. Ann. §9:3577.1 et seq, as amended in 1999.��Amendmentseffective on 1/1/2000.

Applicability: To deferred presentment transaction in which the licensee accepts acheck from the consumer dated on the date it was written and agrees to hold thecheck for a period not to exceed 30 days and pays the consumer the face amountless permitted fees. Otherwise, consumer credit code applies. La. Rev. Stat. Ann.§9.3519. (36 percent per year interest rate cap).

Licensing Requirements: Must be licensed by the Office of Financial Institutions.

Permitted Charges: Fee permitted of 16.75 percent of the face amount of thecheck but no more than $45. If unpaid at maturity, can charge an annual interestrate of 36 percent for the first year and 18 percent thereafter if still unpaid. Canonly charge the amount of an insufficient funds fee as the licensee’s depositoryinstitution imposes and may only charge it once per check. If the deferred pre-sentment transaction is prepaid in full within the first five days, the licensee mustrefund any and all unearned charges by a method no less favorable to the con-sumer than the actuarial method, less $20 of the original fee.

Prohibited Acts: Cannot charge a fee greater than that allowed; sell any goods orservices, e.g., insurance, without the approval of the Commissioner; refuse apartial loan payment of $50 or more. Cannot renew or roll over the transaction BUTthe licensee may do so after accepting a partial payment of 25 percent of theamount advanced plus fees charged and enter into a new transaction. It is unlawfulfor any licensee to threaten any customer with prosecution for any check acceptedor to refer the consumer for prosecution. Cannot divide the transaction into multipleagreements for the purpose of obtaining higher fees.

Loan Terms: Shall not exceed 30 days and amount paid to the consumer can beno more than $300.

Disclosure: Must post a notice provided by the Commissioner which includes a tollfree number for its office and must post the fee schedule in a conspicuous place inthe lending location.

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32 M.R.S.A. §6131 et seq. prohibits a check casher from cashing or advancingany money on a postdated check. §6138(4)(D). Otherwise, Maine’s UCCC applies.9-A M.R.S.A. §2-301. ($5 for loans under $75; $7.50 for loans from $75 to $250).

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None. Consumer loan act applies. Md. Code Ann. Com. Law II §12-301 et seq.(2.75 percent per month interest rate cap).

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None. Small loan act applies. Mass. Gen. Laws Ann. ch. 140 §96 et seq. (23percent per year interest rate cap on amount financed plus $20 administrative fee).Check cashers are specifically prohibited from making loans unless licensed underthe small loan act. Mass. Regs. Code pit. 209, §45:14(8).

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None. Regulatory loan act applies. Mich. Comp. Laws §493.1 et seq.(25 percent per year interest rate cap and allows a loan processing fee of up to twopercent of the loan amount).

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Minnesota Stat. Ann. §47.60 et seq.

Applicability: To loan a short term, unsecured loan to be repaid in a single install-ment not to exceed $350. A consumer small loan lender is a financial institutionwhich includes regulated lenders or a person registered with the Commissionerand engaged in the business of making consumer small loans. (Otherwise, 33percent per year interest rate cap).

Filing Requirements: Must file with the Commissioner as a consumer small loanlender. The filing must be on a form prescribed by the Commissioner accompa-nied by a $150 fee. The applicant must disclose any liquid assets of at least$50,000. Revocation of the filing and the right to engage in the business of makingsmall loans is the same as in the case of a regulated lender under §56.09.

Permitted Charges: In lieu of interest, finance charges, or fees, a consumer smallloan lender may charge the following: 1) $5.50 for loans from $0 to $50; 2) 10percent of loan proceeds and $5 administrative fee for loans from $50 to $100; 3)seven percent of loan proceeds with a minimum of $10, plus a $5 administrativefee on loans from $100 to $250; and 4) six percent of the loan proceeds with aminimum of $17.50, plus a $5 administrative fee for loans from $250 to $350.

On a loan transaction in which cash is advanced in exchange for a personal check,a return check may be charged. After the maturity date, the contract rate cannotexceed 2.75 percent per month of the remaining loan proceeds calculated at 1/30of the monthly rate in the contract for each calendar day that the balance is out-standing. No insurance charges or other charges can be charged, collected, orimposed.

Prohibited Acts: Insurance charges or other charges are not permitted. A loancannot be repaid by the proceeds of another loan made by the same lender. Theproceeds from a loan cannot be applied to another loan from the same lender. Aloan to a single borrower cannot be split or divided and a borrower cannot havemore than one loan outstanding with the result of collecting a higher charge thanpermitted or in an aggregate amount of principal cannot ever exceed $350.

Disclosures: In addition to disclosures required by the Truth In Lending Act, thelender must furnish a copy of the loan contract to a person obligated by it upon thatperson’s request. The lender must prominently display a schedule of chargeswhich must be approved by the Commissioner. The schedule of charges mustinclude a notice that says “These loan charges are higher than otherwise permittedunder Minnesota law. Minnesota permits these higher charges only because shortterm loans might otherwise not be available to consumers. If you have anothersource of a loan, you may be able to benefit from a lower interest rate and otherloan charges.” Upon repayment of the loan in full, lender shall mark it “paid” or“canceled” within 20 days after repayment.

Loan Terms: Term of loan cannot be for more than 30 days.

Civil/Criminal Penalties: A person obligated to a lender can file a written com-plaint with the Commissioner. Upon receipt of the complaint, the Commissionermay inspect the lenders accounts and records. Revocation of a license will notaffect the obligation of any preexisting lawful contract between the licensee and anyborrower. Violation is also a gross misdemeanor.

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Private Right of Action: If unlicensed, loan is void and debtor may recover allamounts paid if brought within one year. For intentional violations, consumer canrecover $100 for each violation as long as no other remedy is available under stateand federal law.

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Miss. Code Ann. §75-67-501 et seq., amended in 1999.

Applicability: To check cashers. Otherwise, small loan regulatory law applies.Miss. Code Ann. §75-67-135.

Licensing Requirements: Department of Banking & Consumer Finance enforces.Must not have been convicted of a felony within last ten years; file a bond of$10,000. Must submit a set of fingerprints to the enforcement agency; show a networth of at least $20,000 for the first license and $5,000 for each additional licensewhich is required for each additional location. Must pay an initial fee of $750 and$475 for each renewal Annual renewal. The Department may charge a fee of upto $300 to examine the books and records of any licensee plus any actual ex-penses.

Exemptions: Any bank, trust company, savings association, savings and loanassociation, savings bank or credit union domiciled in the state; any person whocashes a check for free; retail seller of goods or services who cashes checks fromtime to time as an incident or independently of a retail sale and does not chargemore than 3 percent of face amount of check or $10, whichever is greater.

Permitted Fees: 18 percent of the face amount of the check.

Prohibited Acts: Cannot accept a postdated check. Cannot accept a checkwithout identification. Cannot institute criminal prosecution for a check returned dueto insufficient funds with the intent of aiding in the collection of or enforcing pay-ment of the amount of the check. Cannot defer deposit of a check exceeding $400on the face of the check. Each customer is limited to a maximum amount of $400at any one time. Cannot offer coupon redemption, catalog sales or other similarinducements as part of the transaction. May not charge a late fee or collection feeas a result of a returned check or the default of the customer unless awarded bythe court. Cannot charge the consumer for a money order or check if the licenseepays the customer in that form.

Disclosures: Display license in conspicuous place in business. Display feeschedule in a conspicuous place in business. Must be a written agreement signedby customer and licensee which shall contain the total amount of any fees charged,expressed as a dollar amount and as an APR.

Loan Terms: Can defer deposit of check for up to 30 days.

Civil/Criminal Penalties: Misdemeanor to operate without a license, punishable byup to one year in prison or up to $1,000 fine or both. If wilful violation of anyprovision of the act, can be fined up to $1,000 per violation. Commissioner mayimpose a civil penalty for any violation of the act of up to $500 per violation.

Enforcement: Commissioner may suspend or revoke the license for specificreasons. May issue cease and desist order and obtain injunction from a court.

Sunset: 7/1/02.

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Missouri Rev. Stat. §408.500; 4 Mo. Code Reg. 140-11.010 et seq.

Applicability: Lenders exclusively in the business of making unsecured loansunder $500 and who are not otherwise registered under other lending laws.Otherwise, consumer loan act applies. Mo. Rev. Stat. §408.200. (rates are asagreed to by the parties).

Registration Requirement: Must register with Director of the Division of Financeand pay annual fee of $300.

Permitted Charges: Can charge whatever rate is approved by the Director (whichmust approve a rate comparable with those lawfully charged in the marketplace forsimilar loans). In determining marketplace interest rates, the Director shall con-sider the appropriateness of rate requests made by lenders and rates allowed onsimilar loans in the states contiguous to Missouri. If the Director takes no actionwithin 30 days of submission of a rate request, it is deemed approved. Interestcannot be discounted nor deducted from the principal of the loan, nor paid norreceived at the time the loan is made and shall not be compounded. The loan feeand the first month’s finance charge shall be earned upon issuance of the loan. Inthe event of prepayment, subsequent months’ finance charges shall be earned ona monthly pro rata basis. No attorney’s fees, collection costs or other costs of anytype of kind are permitted. A contract in default may bear interest at the contractrate and not the APR. If default occurs in any month but the last, cannot call in theloan until 15 days from default. If the loan is called in there is no rebate of un-earned interest.

Prohibited Acts: Charging a fee in excess of that permitted (renders the contractvoid). Loan splitting with the purpose or result of garnering more interest thanwould have been available on one loan. Dating the post-dated check earlier thanthe due date of the loan.

Disclosures: A receipt must be given for any payment made in cash.

Loan Terms: Must have a minimum term of 14 days, not to exceed 10 months.

Security: Post-dated check is not considered security, and no collateral can betaken to secure the loan.

Penalties: Should a check for an earlier date be accepted or should any post-dated check be deposited prior to the date on it, the related note shall be void andboth principal and interest refunded to the borrower.

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Mont. Code Ann. §32-5-112. Deferred deposit loan act passed in 1999. No yetcodified. Until this act, the consumer loan act applied which had no interest ratelimits.

Applicability: To a loan in which the lender accepts a check dated on the date thecheck is written or dated subsequent to the date on which the check is written andagrees to hold it for a period of days prior to presentment or deposit.

Exemptions: Any bank, or other state or federally regulated financial institution; orany retail sellers who cash checks incident to or independent of a sale and whocharge no more than $2 per check for the service.

Licensing Requirements: Enforced by the Department of Commerce. Applies tothose who make deferred deposit loans and to persons who facilitate, enable, oract as a conduit for persons making these loans. Must pay an application fee of$375. Department must make certain findings before issuing or renewing a licenseincluding that the applicant’s financial responsibility, experience, character, andgeneral fitness warrant the belief that the business will be operated lawfully andfairly. Applicant must have unencumbered assets of at least $25,000 per locationand post a bond of $10,000 per location which must continue in effect for two yearsafter the licensee ceases to operate in the state. The bond must be available topay to consumers damages for harm caused by violations of the act. Applicantmust execute a sworn statement that it will not use the criminal process to collectthe payment of deferred deposit loans or use any civil process not generallyavailable to creditors to collect on defaulted loans. The Department shall conductannual examinations. Licensees must file annual reports and disclose in detailspecific information about resources, assets, and liabilities of the licensee; income,expense, gain/loss, and balance sheets; total number of loans and number madeand outstanding in the year; minimum and maximum amount of checks that weredeferred; total number and dollar amount of returned checks; total number anddollar amount of checks recovered and amount charged off; verification that thelender has note used in collection efforts.

Loan Terms: Term cannot exceed 31 days, and amount, exclusive of allowablefees, cannot exceed $300. Minimum loan amount is $50. Written loan documentsmust be provided the consumer. The holder or assignee of any check written by aconsumer in connection with a deferred deposit loan takes the instrument subjectto all claims and defenses of the consumer.

Disclosures: Must give a pamphlet prepared by or at the direction of the depart-ment that explains the consumer’s rights and responsibilities, and includes atelephone number of the department that handles complaints. Must provide writtenloan agreement that gives identifying information about the lender, an itemization ofthe fees and interest charges to be paid, a clear description of the consumer’sobligations, and a 14-point bold typeface statement informing the consumer that heor she cannot be prosecuted in criminal court for collection of the loan which mustbe located immediately preceding the consumer’s signature.

Permitted Fees: Not more than 25 percent of the face amount. Insufficient fundfee cannot exceed $15 and only one can be collected and is the exclusive form oflate fee allowable. May obtain reasonable attorneys’ fees and court costs if judg-ment is entered in favor of the lender.

Prohibited Acts: A list of 16 items is enumerated which parallel in many respects

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the model act. Included are threatening or using the criminal process to collect thedebt; engaging in unfair, deceptive, or fraudulent practices; entering into a loanwhere the amount exceeds 25 percent of the consumer’s monthly income; makinga loan to a consumer who has two or more outstanding deferred deposit loan; incombination with other outstanding loans, making a loan which puts the total over$300; renewing, repaying, refinancing a deferred deposit loan with the proceeds ofanother, though a loan may be extended without additional charge; accepting anycollateral; charging for insurance; including certain clauses in the loan agreement.

Enforcement: The Department may revoke or suspend a license for any violationof the act. A revocation or suspension does not relieve the licensee from civil orcriminal liability.

Private Right of Action: Any violation of this act constitutes an unfair or deceptivetrade practice. Consumer can sue for actual and consequential damages, andstatutory damages of $1,000 per violation plus costs and attorneys’ fees. Con-sumer can also seek injunctive or other equitable relief and bring the case as aclass action. Remedies are not intended to be exclusive.

Criminal/Civil Penalties: Any person who knowingly violates the act is guilty of amisdemeanor and is subject to a fine of not more than $1,000 or imprisonment notexceeding six months or both.

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Nebraska Rev. St. §45-901 et seq.

Applicability: To anyone who, for a fee, accepts a check dated on the date it waswritten and holds it for a period of days prior to deposit or presentment or accepts acheck dated subsequent to the date it was written. Otherwise, small loan actapplies. Neb. Rev. St. §45-137. (24 percent per year interest rate cap).

Exemptions: To any financial institution organized under the law of the state or theU.S.

Licensing Requirements: Must disclose any misdemeanors involving the act orfelonies, pay a $300 fee and provide a surety bond of $50,000; must have assetsof at least $25,000. Bond shall be renewed and refiled annually. A public hearing isheld on each application. Enforced by the Department of Banking and Finance.

Disclosures: Must conspicuously post the license and conspicuously display aschedule of all fees, charges, and penalties for all services to be provided. At thetime of any transaction, lender must provide a notice written in plain English, statingthe fee to be charged, the date on which the check will be deposited, and anypenalty not to exceed $15 if the check is not negotiable on the date agreed upon.

Permitted Fees: $15 per $100 or pro rata for any part of the face amount of thecheck.

Prohibited Acts: Hold more than two checks at any one time from a single bor-rower; hold checks in an aggregate face amount of more than $500; hold a checkfor more than 31 days; accept a check as repayment, refinancing, or any otherconsolidation of a check or checks held by the same licensee.

Enforcement: May suspend or revoke a license; issue a cease and desist order;initiate an action in court for an injunction.

Penalties: Can impose a fine not to exceed $500 per violation. Operating withouta license is a class IV felony.

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Nev. Rev. Stat. §604.010 et seq. Amended in 1999 to include certain consumerprotections listed under the categories Loan Terms, Permitted Fees, and ProhibitedActs below. Regulations to be promulgated.

Applicability: To check cashers and any person engaged in the business ofdeferring deposits of checks for a fee, service charge, or other consideration.Otherwise, no usury cap applies. See Nev. Rev. Stat. §675.040.

Exemptions: Banks, trust companies, savings and loan associations, creditunions, development corporations, mortgage companies, thrift companies, pawn-brokers, or insurance companies; a licensee to make installment loans; retailerswho do not hold themselves out as a check-cashing service and who from time totime cash checks for a fee of not more than $2, or a corporation that has beencontinuously and exclusively engaged in a check-cashing service in the state since7/1/73.

Registration Requirements: Application must include information about thefinancial responsibility, background, experience of applicant; pay $250 fee; obtain asurety bond payable to the state in the amount of $50,000 or deposit securities inlieu of a bond. Must renew annually.

Disclosures: Prominently display license. Post a notice that states the feescharged for the services in a conspicuous place in every location where businessis conducted. Give written notice to each customer of the fees charged to besigned by the customer before any such services are provided.

Loan Terms: Must provide written agreement to customer in English to include theidentity of the registrant, an itemization of the fees and interest to be paid, disclo-sures under the Truth In Lending Act, disclosures required under any applicablestate law or regulation, and a clear description of the borrower’s obligations.

Permitted Fees: No maximum. Cannot charge more than $25 as an insufficientfunds fee and cannot charge it more than twice, regardless of the number of timesthe check is presented for payment. Cannot charge interest upon default thatexceeds a rate equal to or less than the prime rate at the largest bank in the state.

Prohibited Acts: Cannot charge interest upon default that exceeds a rate equal toor less than the prime rate at the largest bank in the state. Cannot charge morethan $25 as an insufficient funds fee and cannot charge it more than twice, regard-less of the number of times the check is presented for payment. Cannot use orthreaten to use the criminal process to collect on a deferred deposit check. Can-not make a loan that exceeds one-third of the borrower’s expected net monthlyincome unless justified by particular circumstances. Cannot charge to cash acheck representing the proceeds of a deferred deposit. Cannot make more thanone loan to the same borrower at one time unless the borrower seeks multipleloans up to not more than one-third of expected net monthly income. Cannotextend the period of repayment to the same borrower beyond 10 weeks after theexpiration of the initial loan period. Cannot accept any collateral for the loan.Cannot include in the written contract any hold harmless, confession of judgment,assignment of wages, or waiver of any claim or defense arising under the contractor this act.

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None. Small loan act applies. N.H. Rev. Stat. Ann. §399-A et seq.(24 percent per year interest rate cap). Act amended effective 1/1/2000 to allowany charge or interest rate agreed to by the parties to the loan in writing for closed-end loans of $10,000 or less.

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N.J. Stat. Ann. §17:15A-47. Consumer loan act applies but rates as agreed to bycontract. N.J. Stat. Ann. tit. 17, §1 et seq. However, criminal law sets the usurycap at 30 percent. N.J. Stat. Ann. §2C: 21-19.

Prohibited Acts: A check cashing licensee cannot cash or advance money on apostdated check.

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None. Small loan business act applies but interest rate is that agreed to by con-tract. N.M. Stat. Ann. §58-15-1 et seq.

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N.Y. Banking Law §373 (McKinney). Licensed lender law applies but interest rateis that agreed to by contract. N.Y. Banking Law §340 et seq. However, criminal lawsets the usury cap at 25 percent. §190.40 of N.Y. Penal Code.

Prohibited Acts: A check casher licensee cannot make loans nor cash or advanceany moneys on a postdated check unless it is a payroll check.

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North Carolina Gen Stat. §53-275.

Applicability: To check cashers. For other lenders, the consumer finance actapplies. N.C. Gen. Stat. §53-173. (36 percent per year interest rate cap).

Exemptions: A bank, savings institution, credit union, or farm credit systemorganized under the laws of the state or U.S.; retail seller of goods or services whocashes checks from time to time as an incident or independently of a retail saleand does not charge more than $2.00 for the service.

Licensing Requirements: Must file application and pay a $250 fee and a $500investigation fee. Must renew annually and pay the $250 fee plus a $50 fee foreach branch. Must have and maintain liquid assets of at least $50,000. Enforcedby the Office of Commissioner of Banks.

Permitted Fees: Not more than 15 percent of the face amount of the check.

Prohibited Acts: Cannot defer deposit for more than 31 days; face amount ofcheck cannot exceed $300.

Disclosures: Must have a written agreement that has been signed by the cus-tomer and licensee and contain a statement of the total amount of any feescharged, expressed both as a dollar amount and as an APR, and must authorizethe licensee to defer deposit until a specific date not to exceed 31 days; cannotaccept repayment by the proceeds of another check cashed by the same licenseeor any affiliate. Cannot, for any consideration, renew or extend the postdatedcheck beyond the due date; engage in unfair, deceptive, or fraudulent practices.

Enforcement: Can suspend or revoke the license; issue cease and desist order.

Penalties: Can impose civil penalties not to exceed $1,000 per violation. Failure toobtain a license is a class I felony.

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Consumer finance companies act applies. N.D. Cent. Code §13-03.1-5.1(1) (30percent for loans under $250 and 24 percent for loans from $250-$500).

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Ohio Rev. Code Ann. §1315.35 et seq.

Applicability: To check cashers. Otherwise, small loan law applies. Ohio Rev.Code Ann. §1321.01 et seq. (28 percent per year interest rate cap).

Licensing Requirements: Must apply and pay $200 investigative fee and $500application fee. Applicant must show financial responsibility, experience, reputa-tion, general fitness, and net worth of not less than $100,000. Enforced by Super-intendent of Financial Institutions.

Permitted Fees: Interest at five percent per month. Unearned interest shall not bededucted from the proceeds of the loan or paid in advance. Interest must becomputed on the unpaid balance and shall not be compounded. Must refundunearned interest if loan is paid in full after the first month. May charge loanorigination fees not exceeding $5 per $50 of the amount of the loan; check collec-tion charges not exceeding $20 plus any amount passed on by the financialinstitution.

Disclosures: Must post license conspicuously in the place of business. Loancontract must be in writing and disclose the total amount of fees and charges; therate of interest calculated as an APR based on the sum of the principal of the loanand the loan origination fee, check collection charge, and all other fees or chargescontracted for; the total amount of each payment; when each is due and the totalnumber of payments that the borrower will be required to make under the contract;a statement in boldface type of at least 10-point size stating: “WARNING: The rateof interest charged on this loan is higher than the average rate of interest chargedby financial institutions on substantially similar loans;” and that the loan is not beingmade to a borrower for the purposes of retiring an existing loan between the checkcashing business and that borrower made under this act.

Loan Terms: Total amount of loan cannot exceed $500 and duration cannotexceed 6 months. Loan contract must be in writing and disclose in a clear andconspicuous manner the total amount of fees and charges, the APR, the paymentschedule, and a warning that the rate of interest on the loan is higher than theaverage rate of interest charged by financial institutions on substantially similarloans.

Prohibited Acts: Refinancing loans made under this act with another such loan.Making loans in excess of $500 or with a term longer than 6 months. Cannotcharge check collection fee unless contracted for in the written agreement. Cannotmake a loan if there exists an outstanding loan between the check cashing busi-ness and the borrower made under this act.

Enforcement: May suspend or revoke a license for certain reasons.

Private Right of Actions: A violation of this act constitutes an unfair or deceptiveact or practice. A borrower injured by the violation shall have a cause of action andmay obtain the same relief as under the Unfair and Deceptive Acts and Practices(UDAP) statute.

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Okla. Stat. tit.14A, §3-508B (prohibits the making of loans with a maximum termof less than 60 days). (30 percent per year interest rate cap).

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None. Consumer finance act applies but interest rate is that agreed upon in con-tract. Or. Rev. Stat. §725.340.

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None. Check cashers are specifically prohibited from making payday loans underCheck Cashing Licensing Act of 1998, §505(a). Otherwise, consumer discountcompany act applies. 7 Pa. Cons Stat. Ann. §6201 et seq. ($9.50 per $100 peryear).

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None. Small loan act applies. P.R. Laws Ann. §10-942 et seq. (25 percentinterest rate cap but can be set by Finance Board).

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None. Small loan act applies. R.I. Gen. Laws §19-14.2-1 et seq. (36 percent peryear interest rate cap).

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S.C. Code Ann. §34-39-110 et seq.

Applicability: To a transaction pursuant to a written agreement which in exchangefor a fee involves accepting a check dated on the date it was written and holding itfor a period of time before presentment for payment/deposit. Otherwise, consumerfinance law applies. S.C. Code Ann. §34-29-140. ($25/$100/year).

Exemptions: Bank, savings institution, credit union, or farm credit system orga-nized under the laws of the U.S. or any state; a person engaged in the retail sale ofgoods or services who from time to time cashes checks, drafts, or money orderswithout a fee.

Licensing Requirements: State Board of Financial Institutions enforces. Mustsubmit application, pay an application fee of $250 and an investigative fee of $500.Must be renewed annually. Must show a minimum net worth of at least $25,000 forthe operation of each location and must show financial responsibility, character,experience, and general fitness.

Permitted Fees: Not more than 15 percent of face amount of the check and canbe imposed only once. Returned check charge not to exceed the lesser of $10 orthe fee imposed by the financial institution.

Loan Terms: May defer presentment of the check for no more than 31 days. Faceamount of a check may not exceed $300 exclusive fee allowable fees.

Prohibited Acts: A check accepted for deferred presentment may not be repaidfrom the proceeds of another check accepted for deferred presentment by thesame licensee or an affiliate. Also cannot renew or otherwise extend presentmentfor a period beyond the time set forth in the written agreement. Cannot pursuecriminal charges for bad checks, only civil remedies. Cannot engage in unfair,deceptive, or fraudulent practices, including unconscionable conduct. Cannotaccept an undated or postdated check.

Disclosures: Must conspicuously post the license and a notice stating the feecharged for services, and shall file the statement of fees with the board. Musthave a written agreement signed by both the customer and licensee which includesa statement of the total amount of fees charged, expressed both as a dollaramount and as an APR, and must expressly authorize deferment of the check untila specific date. Must also give state and federal truth-in-lending disclosure formbefore consummation.

Enforcement Actions: Can suspend or revoke the license or issue a cease ordesist order.

Penalties: Can impose a fine of up to $2,000 per violation. Failure to obtain alicense is a misdemeanor.

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Tenn. Code Ann. §45-17-101 et seq.

Applicability: To a person who holds a check for a period of time prior to present-ment for deposit. Otherwise, industrial loan and thrift companies act applies. Tenn.Code Ann. §45-5-302. (24 percent per year interest rate cap).

Licensing Requirements: Department of Financial Institutions enforces. Must shownet worth of at least $25,000 and record of any person owning more than fivepercent of the company regarding any criminal activity or other act of dishonesty, orother act which constitutes a breach of fiduciary duty. Must pay a filing fee of $500per location and produce a financial statement. Must renew annually.

Permitted Fees: Not more than 15 percent of face amount of check or $30 whichshall not be deemed interest for any purpose.

Prohibited Acts: Cannot prosecute a customer for a returned check. Cannot alteror delete the date on any check or accept an undated or postdated check. Cannotengage in unfair or deceptive acts, practices or advertising. Cannot make a de-ferred presentment loan to any customer who, upon inquiry by the licensee (andcustomer must state in writing), has no more than two checks outstanding to anylicensee that equal or exceed $500. If the two checks do not equal $500, can makea loan which, when combined with the others, does not exceed the total of $500. Inno event can a licensee make a loan to a customer who has three or more suchloans outstanding. Cannot renew or otherwise consolidate one such transaction intoanother and, if so, the transaction is void and unenforceable.

Disclosure: Must conspicuously post the license. Must give the customer a writtenexplanation in clear, understandable language, of the fees to be charged and thedate on which the check will be deposited prior to consummation. Must give Truth inLending Act (TILA) disclosures before consummation. Must ensure that customerreceives and acknowledges an accurate and complete notification and disclosure ofthe itemized and total amounts of all fees and other costs.

Loan Terms: Must be in writing and signed by borrower. Deferred date can be nolonger than 31 days. Must provide a written explanation in clear, understandablelanguage, of the fees to be charged and the date on which the check will be depos-ited prior to consummation and acknowledges an accurate and complete notificationand disclosure of the itemized and total amounts of all fees and other costs.

Civil/Criminal Penalties: Specifically exempts businesses regulated under this actfrom the applicability of other acts.

Enforcement: May revoke or suspend the license for particular reasons. Can issuecease and desist orders and fine up to $1,000 for each transaction in violation of thisact.

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7 Tex. Admin. Code §1.605 et seq. (effective June 16, 2000)

Applicability: To payday loan or deferred presentment transaction defined to be acash advance made in exchange for the consumer’s personal check, or in ex-change for the consumer’s authorization to debit the consumer’s deposit accountin the amount of the advance plus a fee and where the parties agree that the checkwill not be cashed or deposited, or that the consumer’s deposit account will not bedebited until a designated future date.

Exemptions: None listed.

Licensing Requirements: Same as other lenders under Tex. Finance Code Ann.§342.

Permitted Charges: On a cash advance of less than $30, an acquisition chargethat is not more than $1 for each $5 of the cash advance.

On a cash advance equal to or more than $30 but not more than $100, an acquisi-tion charge that is not more than the amount equal to one-tenth of the amount ofthe cash advance and an installment account handling charge that is not morethan $3 per month if the cash advance is not more than $35, $3.50 a month if thecash advance is more than $35 but not more than $70, or $4 a month if the cashadvance is more than $70.

On a cash advance of more than $100, an acquisition charge that is not more than$10; and an installment account handling charge that is not more than the ratio of$4 a month for each $100 of cash advance.

Disclosures: Must post a notice of the fee schedule; must reduce agreement towriting containing the name of the licensee, the transaction date, the amount of thecheck, a statement of the total amount charged (expressed as both a dollaramount and as an annual percentage rate, and the earliest date on which thecheck may be deposited. The agreement must also contain the name and addressof the Office of the Consumer Credit Commissioner and the telephone of theconsumer helpline and a notice that states:

This cash advance is not intended to meet long-term financial needs. Thisloan should only be used to meet immediate short-term cash needs.Renewing the loan rather than paying the debt in full when due will requirethe payment of additional charges.

Prohibited Acts: The lender cannot make more than one loan to a consumer or toa husband and wife for the purpose of obtaining an amount of interest greater thanthe amount of interest otherwise allowed. Lender cannot pursue criminal chargesto collect on the debt. Lender cannot renew a loan and collect an acquisitioncharge more than once per month.

Loan Terms: Term of payday loan cannot be for less than seven days nor for morethan 31 days.

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Check Cashing Registration Act, S.B. 57, to be codified as Utah Code Ann. §7-23-101 et seq.

Applicability: To a check casher who provides the maker of a check an amount ofmoney equal to the face value of the check minus any fee or interest charged forthe loan and agrees not to cash the check until a specified date.

Exemptions: Any depository or depository holding institution or any institutioncontrolled by a depository or depository holding institution or a person who cashesa check in a transaction that is incidental to the retail sale of goods and charges nomore than one percent of the amount of the check or $1.

Registration Requirements: A department enforces but the act itself does notname the agency. It is given the authority to make rules and regulations. Mustregister by July 1, 1999, pay a registration fee (unspecified in the act), providecertain identifying information about the registrant, and disclose whether theregistrant has been convicted of or been subject to any injunction, administrativeorder, or judgment regarding any crime involving moral turpitude. Must renewannually.

Permitted Fees: No caps specified.

Prohibited Acts: Cannot make a deferred deposit loan unless registered andmust be a check casher to make such loans under this act. Cannot operate amobile operation. Cannot roll over (defined as the extension or renewal of the termof the loan) a loan for terms totaling more than 12 weeks.

Disclosure: Must conspicuously post a complete schedule of interest or fees indollar amounts, and the number a person can call to make complaints. Must givethe customer a written contract and orally review the terms of the contract whichmust contain Truth In Lending disclosures, the amount of any interest and fee, andthe date on which the full amount is due. Must also comply with Title 70C of theUtah Consumer Credit Code.

Loan Terms: Must be in writing; customer must be given a copy.

Civil/Criminal Penalties: Violation of the act is a class B misdemeanor. Act doesnot limit any civil liability that may exist against a check casher.

Enforcement: May revoke the registration. Can issue cease and desist orders.

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None. Small loan act applies. Vt. Stat. Ann. tit. 8 §2230. (18 percent per yearinterest rate cap).

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None. Small loan act applies. V.I. Code Ann. tit. 9 §182 et seq. (26 percent peryear interest rate cap).

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None. Consumer finance act applies. Va. Code Ann. §6.1-272.1. (36 percent peryear interest rate cap). Va. Code Ann. §6.1-432 et seq. Check cashers arespecifically prohibited from cashing post dated items, other than government orpayroll checks.

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�Wash. Rev. Code §31.45.010 et seq.

Applicability: To check cashers who make small loans of up to $500 for a periodof 31 days or less. Otherwise, the consumer loan act applies. Wash. Rev. Code§31.04.101 et seq. (25 percent per year interest rate cap plus four percent loanfee).

Exemptions: Any bank, trust company, savings bank, savings and loan associa-tion, or credit union and others who cash checks as a convenience and as a minorpart of its customary business and not for profit.

Licensing Requirements: Must pay a fee set by regulation; post a surety bondpayable to the state, and bond shall be liable for damages suffered by the borroweras a result of a licensee’s violation. Check cashers must specially apply for a smallloan endorsement to make these loans. Must pay annual assessment fee.Enforced by the Department of Financial Institutions.

Permitted Charges: May charge interest and fees that in the aggregate do notexceed 15 percent of the principal amount borrowed. The Director may adoptrules that exempt certain fees from this cap.

Disclosures: Must conspicuously post license in business. Must also conspicu-ously post a schedule of fees and charges for fees and charges.

Prohibited Acts: A person cannot cash or advance any moneys on a postdatedcheck in excess of the amount of services purchased, without first obtaining asmall loan endorsement.

Loan Terms: A licensee may advance moneys on the security of a postdatedcheck, provided that the time period between the date the loan is granted and thedate of the postdated check does not exceed 31 days.

Enforcement: Director may serve charges upon a licensee in a civil action if thelicensee is engaging in unsound practice. Any violation of the law is a misde-meanor.

Private Right of Action: Any violation of the act is an unfair and deceptive act orpractice and remedies that are available under the Unfair Deceptive Acts andPractices statute apply.

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None. Small loan act applies. W.Va. Code §46A-4-107. (31 percent per yearinterest rate cap). W. Va. Code §32A-3-1 et seq. Check cashers are specificallyprohibited from making payday loans. If a person has violated these provisions,the maker has a cause of action to recover from that person the amount of thecheck, plus a civil penalty of between $100 and $1,000.

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None. Small loan act applies but interest rate cap was removed. Wis. Stat.§138.09(7)(bp).

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<4�4�4�4�4�� Wyo. Stat. Ann. §40-14-362 et seq.

Applicability: To a postdated check casher, who is a person engaged in thebusiness of lending money by means of postdated check transactions or similararrangements. Otherwise, UCCC applies. (36 percent per year interest rate cap).

Licensing Requirements: Must get a license and pay fee of $500.

Permitted Fees: No greater than $30 or 20 percent per month interest on theprincipal balance of the check. Finance charges are fully earned on the day thearrangement is made.

Prohibited Acts: A person cannot engage in business as a postdated checkcasher unless he is licensed. A postdated check cannot be repaid, refinanced, orotherwise consolidated by proceeds of another postdated check accepted by thesame postdated check casher.

Loan Terms: Maximum term is one calendar month.

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Survey of De ferre d Depos it or "Payday" Loan State Law s

Legal Status of Payday L ending in the State

States and Ju risdictions

Au thorized un der p ayd ay lo an law

Permitted2 un der small loan act

C heck C ash ers p ro hibited from

accepting po std ated checks

Proh ib ited3

A labam a XAlaska XArizon a X

Arkansas X1

Cal ifornia X1

Co lorad o X

Con necticut X

De law are X X

Dis tric t of Co lum bia X1

F lorid a X1

G eorgia X

Haw aii X1

Idah o XIl l ino is XInd ian a X

Io wa X

K ansas XK entucky XLouis ian a XM ain e X XM ary lan d XMa ssach usetts XMich iga n XMinne so ta X

Miss issippi X 1

M issou ri XM ontan a XN ebraska XNe vad a XNe w Ha mpshire XNew Je rsey X XN ew M exico XNew York X XNorth Carol in a X 1

No rt h Da ko ta X

O hio X 1

O k lahom a X4

O rego n XPe nnsylvania X XPue rto Rico XRh ode Is lan d X

S outh Carol in a X

S outh Da ko ta XTenn esse e X

Te xas X

Uta h X1

V ermo nt XVirgin Is la nds XV irginia X X

W ashingto n X

W es t V irginia X XW iscons in XW yom in g X

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Survey of Defe rred D eposi t or "Payday" Loan State Law s

Qu alif ications fo r Lender

States and Ju risdictio ns

Licensin g(L) / Reg istration(R )

B on d N et A ssets/W orth

A la bam aAlaskaArizon a L $5 0,00 0

A rkansas R $2 0,00 0 $2 0,00 0

Cal i fornia R

Co lorad o L

Con necticut

De law are

Dis tric t o f Co lum bia L $ 5,00 0 $2 5,00 0

F lorid a R up to $25 0,00 0

G eorgia

Haw aiiIdah oIl l ino isInd ian a

Io wa L $2 5,00 0 $2 5,00 0

K ansas LK entucky L $50 ,000 - $20 0,00 0Louis ian aM ain eM ary lan dMa ssachu settsMich iga nMinneso ta L $5 0,00 0

Miss issippi L $1 0,00 0 $2 0,00 0

M issou ri RMo ntan a L $1 0,00 0 $2 5,00 0N ebraska L $5 0,00 0 $2 5,00 0Ne vad a R $5 0,00 0Ne w Ha mpshireNew JerseyN ew M exicoNew YorkNorth Carol in a L $5 0,00 0North Dako ta

O hio L $10 0,00 0

O k la hom a

O rego nPe nnsylvaniaPue rto RicoRh ode Is lan d

S outh Carol in a L $2 5,00 0

S outh Dako taTenn esse e L $2 5,00 0

Texas L

Uta h R

V ermo ntVirgin Is la ndsV irginia

W ashingto n L

W est V irginiaW iscons inW yom in g L

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Survey of D eferred Deposit or "Pa yday" Loan State Law s

Loan Term s and C ondition s


Maximu mT erm 5

Days /Am t

Maximu m In terest

Rate /F ees

Sm all Loan or C rim in al Law AP R on $200 Lo an

A la bam a 3 6%Alaska 3 6%Arizon a /$50 0 1 5%

6 3 6%

A rkansas 31 /$40 0 up to $15 + 1 0%6 1 7%

Cali fornia 30 /$30 0 1 5%6 3 0%

Co lorad o 40 /$50 020% up to $30 0

+ 7.5 % of excess3 6%

Con necticut 28.5 2% 10

De law are No Ca p

Dis tric t o f Co lum bia 31/$ 1,00 0 1 0%7 2 4%

Florid a 1 0% or $ 5 7 3 0%

G eorgia 57.6 8% 10

Haw aii 31 /$30 0 1 5%6 2 4%

Idah o No Ca pIll ino is No Ca pInd ian a 36 % or $3 3

Io wa /$50 0 $15 /$10 08 3 6%

K ansas 30 /$78 0 sca le of f ees 3 6%K entucky 60 /$50 0 $1 5/$1 00/1 4 da ys 42.4 5%

10

L ouis ian a 30 /$30 0 16 .75% up to $4 5 3 6%M ain e 3 0%M ary lan d 3 3%Ma ssachu setts 39.8 6%

10

Mich iga n 2 5%Minneso ta 30 /$35 0 sca le of f ees 3 3%

Miss issippi 30 /$40 0 1 8%6 3 6%

M issou ri 1 0 m os /$50 0 $15 /$10 0 No Ca pMo ntan a 31/$ 300+ 2 5%

6 No Ca pN ebraska 31 /$50 0 15 /$10 0 2 4%Ne vad a see footnote 9 No Ca pNe w Ha mpshire 2 4%New Jersey 3 0%Ne w M exico No Ca pNew York 2 5%North Carol in a 31 /$30 0 1 5% 3 6%North Dako ta 3 0%

O hio 6 m os /$50 0 5 % per mon th7 2 8%

O k la hom a 3 0%

O rego n No Ca pPen nsylvania 23.5 7%

10

Pue rt o Rico 2 5%Rh ode Is lan d 3 6%

S outh Carol in a 31 /$30 0 1 5%6

54.6 7%10

S outh Dako ta No Ca pTenn esse e 31 /$50 0 15 % or $3 0 67.3 4%

10

Texas 3 1/ $ 10 + $4 /$10 0 31.6 5%10

Uta h No Limit No Ca p No Ca p

V ermo nt 2 4%Virgin Is la nds 2 6%V irginia 3 6%

W ashingto n 31 /$50 0 1 5%7

32.6 6%10

W est V irginia 3 1%W iscons in No Ca pW yom in g 3 0 $ 30 o r 20% /mon th 3 6%

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Survey of Defe rred D eposi t or "Payday" Loan S tate Law s

D isclosure R equirem ents


Po sting of Fees Requ ired

Truth in Lend in g A ct (TILA) Disclosure

R equ ired B y State L aw

Written A greem ent/No tice

Requ ired

A la bam aAlaskaArizon a Y es Y es Y es

A rkansas Y es No Y es

Cal i fornia No No Y es

Co lorad o Y es Y es Y es

Con necticut

De law are

Dis tric t o f Co lum bia Y es No No

Florid a Y es No No

G eorgia

Haw aii Y es No Y esIdah oIl l ino isInd ian a Y es

Io wa Y es No No

K ansas No No Y esK entucky Y es Y es NoL ouis ian a Y es NoM ain eM ary lan dMa ssachu settsMich iga nMinneso ta Y es No Y es

Miss issippi Y es No Y es

M issou ri No No NoMo ntan a No Y esN ebraska Y es No Y esNe vad a Y es Y es Y esNe w Ha mpshireNew JerseyN ew M exicoNew YorkNorth Carol in a No No Y esNorth Dako ta

O hio Y es No Y es

O k la hom a


S outh Carol in a Y es Y es Y es

S outh Dako taTenn esse e No Y es Y es

Texas Y es No Y es

Uta h Y es Y es Y es

V ermo ntVirgin Is la ndsV irginia

W ashingto n Y es No No

W est V irginiaW iscons inW yom in g No Y es Y es

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1Applies to check cashers only

2Payday loans permitted in thestate because the Small LoanAct does not cap interest rateson fees. However, otherprovisions of the small loanlaw apply.

3Prohibited except underrestricted conditions and usurycaps apply. See "Small LoanAPR column."

4Authorized under Small LoanAct only for loans of $100 orless. Loans greater than $100have a minimum term of 60days which effectively prohibitsshort-term lending.

5Term is in days unlessotherwise specified.

6Percentage of face amount ofthe check.

7Percentage of face amount ofthe check. Other fees arepermitted.

8Maximum fee of $15 on first$100 borrowed. $10 or pro rataamount on remaining incre-ments of $100

9Maximum interest and fees tobe set by regulation.

10Effective Annual PercentageRate (APR) on a small loan of$200 for a term of 1 year (APRincludes allowable fees)

11CR means criminal. CVmeans civil fines, suspensionor revocation of license; orcease and desist order.

12 NS means "nonespecified".

13 Allowed once.

14 Allowed but under limitedcircumstances.

EndnotesSurvey of Deferred Deposit or "Payday" Loan State Law s

Lo an Te rm s and C ondit ion s Pe nalt ie s

Sta tes and Ju ris dic tio nsR ollov e r/

R efin an cing Proh ibi ted

M a ximu m N um ber of O uts ta nding

Lo an s a t On e Tim e

Penalties 11

In clude d

Priv ate Righ t

of Actio n12

A la bam aAlaskaArizon a No On e CR NS

A rkansas Y es On e CR/CV Y es

Cal i fornia No On e CR/CV Y es

Co lorad o No13 Up to $5 00/l ice nse Y es Y es

Con necticut

De law areDis trict o f Co lum bia No No Limit Y es NS

Florid a No No Limit No NS

G eorgia

Haw aii No On e CR Y esIdah oIl l ino isInd ian a

Io wa Y es Two CR/CV NS

K ansas Y es No Limit CR/CV Y esK entucky No Two CV NSL ouisian a Y es No Limit CR/CV NSM ain eM ary lan dMa ssachu settsMich iga nMinneso ta Y es No Limit CR/CV Y es

Miss issippi No No Limit CR/CV NS

M issou ri No No Limit CV NSMo ntan a Y es Two CR/CV Y esN ebraska No Two CR/CV NSNe vad a No No Limit No NSNe w Ha mpshireNew JerseyN ew M exicoNew YorkNorth Carol in a Y es No Limit CR/CV NSNorth Dako ta

O hio Y es CR/CV Y es

O k la hom a


S outh Carol in a Y es No Limit CR/CV NS

S outh Dako ta Th re e CV NSTenn esse e Y es

Texas No14 No Limit NS

Uta h No No Limit CR/CV NS

V ermo ntVirgin Is la ndsV irginiaW ashingto n Y es No Limit CR/CV Y es

W est V irginiaW iscons inW yom in g Y es No Limit CR/CV Y es

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